Contrary to conventional market narratives in the West thermal coal demand globally has a long runway of growth ahead of it.
Not surprising the growth is driven by relatively poor countries that are more or less following a similar development path to the one the U.S. and Europe pursued ~ 100 years ago.
Resources are scarce in these countries and, like everywhere, reliability is the number 1 priority.For these countries it doesn’t make a lot of sense to invest in a bunch of extra infrastructure for diffuse and intermittent power sources when compared to cheap, reliable coal.
Wind & solar are not perfect substitutes for thermal coal because they are not dispatchable, if you are a poor country with limited resources it makes little sense to invest in intermittent sources when you’d still need thermal backup. VRE is more or less a rich world luxury.
Don’t these poor countries care about climate change and air pollution? Of course they do, but climbing that first rung of the development ladder is much more important to their populations. Put food on the table first, then worry about the air/environment.
The world is still very energy poor on average…roughly 4 million people die prematurely each year from smoke inhalation due to cooking inside the ‘house’ with wood, dung, and charcoal. A further 4-5 million die prematurely each year from general air pollution.
Predictably, the premature deaths from air pollution are geographically centered on these regions that are relatively energy poor. They have a high demand for energy but because of resource scarcity they are forced to burn the cheapest, dirtiest fuels.
You won’t solve climate change without first solving energy poverty, if our climate policies were pragmatic and humane we’d be helping these countries develop faster and make their energy consumption cleaner (for example by assisting w/ scrubbers at thermal coal plants) rather than making them poorer by pricing them out of world energy markets and proclaiming ‘let them eat VRE cake’ like ignorant tyrants. Developing cheap nuclear power plants would be a game changer as nuclear *is* a perfect substitute for coal and is emission and particulate free.
For the foreseeable future though, thermal coal will continue to be the stepping stone out of the morass of energy poverty for billions as it requires the least amount of resources to implement due to its reliability/dispatchability, abundance, storability, and energy density.
AW
ALLAN'S 