Coal consumption will hit an all-time high in 2022, marking a stunning rebound from just two years ago when utilization of the commodity had fallen substantially. Coal demand largely reversed course due to geopolitical fallout in Europe, resulting from the European Union’s ongoing separation from the Russian economy and its abundant gas supplies, which will likely take many more months – or even years – to fully accommodate. That could keep coal prices high for quite a while, especially when considering a spate of mine closures are on the way.
Though natural gas prices came off the boil in the latter half of the year, coal prices have remained buoyant, which has actually made it less appealing in US markets where gas remains abundant. Renewables remain the cheapest source of energy in the world and may have generated more power than coal in the US this year. By 2025, the International Energy Agency expects there will be more renewable power capacity than coal capacity worldwide.
Related Stocks: NACCO Industries, Inc. (NC), Peabody Energy Corporation (BTU), CONSOL Energy Inc. (CEIX)
In a shocking reversal of fortunes, global coal use rebounded strongly in 2022, now on course to increase by 1.2% and surpass 8 billion tonnes in a single year for the first time ever, according to a report from the International Energy Agency (IEA). That estimate is up meaningfully from the Agency’s July report, which projected global coal consumption rising by 0.7% in 2022. It’s also a massive departure from coal hitting decade-low utilization just two years ago.
As MRP wrote in August, the ongoing coal industry comeback was largely sparked by a natural gas crunch facing several major economies within the European Union (EU) for much of the prior year, helping total coal consumption rebound by around 6% in 2021. Throughout the whole of that year, the world generated more electricity from coal than ever before, up 9% compared to the previous year according to the IEA.
However, in the IEA’s report highlighting coal regaining its former shine, they also noted the increase in coal use in Europe is expected to be temporary, with demand falling in advanced economies. Additionally, natural gas prices have largely come off of their highs in recent months, with the…
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