Growing energy efficiency, rising pollution worries and stiffer competition from other fuels has decreased world demand for coal. High cost deep mines in the Western world are worst hit: in America 24 coal companies have gone bust in the last 3 years and 16% of the rest lose money.
China consumes 47% of the world’s coal and accounts for 87% of the world’s growth in demand for coal. But consumption dipped 1.6% in 2014. Its coal-fired power stations operate at 54% capacity. In Beijing, two big coal fired plants closed in March 2015 and another will shut down in 2016.

The price of natural gas has fallen by 80% since 2008. Two-thirds of coal-fired power plants proposed world-wide have been stalled or cancelled. In 2014 the world added more generation from wind power than coal.

Coal provides for 40% of the world’s electricity. But of 1,617GW of global capacity, 75% is of the dirtiest kind, which burn coal at low temperatures and emits 75% more carbon dioxide than the most advanced “ultra-supercritical” plants, which burn powdered coal at high temperatures. The chimneys of all but the most modern plants emit mercury, sulfur and nitrous oxide, kill 800,000 people a year.

80% of the world’s coal reserves must stay in the ground if the planet is to stand a chance of keeping global warming under 2°C by 2050.
Clean coal technology is expensive and capturing CO2 not economic. Some emerging markets, especially India, have a rising demand for coal. Once India starts to produce more of its own coal, Indonesian, S African and Australian mining firms will be in trouble.

Poland is Europe’s largest producer. It costs $80 to mine a ton of coal with a world price of $61. Poland now has a stockpile of 16m tons as they import much cheaper coal from Russia. Polish miners are pampered.

With decreased demand in China, new coal-mining investments risk becoming stranded assets.

THE WORLD’S BIGGEST COAL MINER GOES BUST
Apr 16th 2016 Economist

The American firm, Peabody Energy (the world’s largest private coal company) with debts of $6 billion, filed for Chapter 11 bankruptcy protection. The industry is indeed in a hole, beset by pricing and pollution problems, plus NGO pressure on creditors and investors to pull out their money.

But Peabody’s problems are also of its own making. It raised big debts to buy an Australian firm, Macarthur Coal, for $5.2 billion in 2011, aiming to bolster sales of metallurgical coal to China just before that country’s steel industry plunged into crisis. As prices of metallurgical and thermal coal (used in power stations) tumbled, it lost $2 billion last year, writing off almost $1 billion of its Australian assets. Since the start of 2015, five big American coal miners have declared bankruptcy, including Arch Coal and Alpha Natural Resources. A former Australian coal billionaire, Nathan Tinkler, was declared bankrupt this year after losing a fortune in coal.

Coal has not joined a recent commodities rally. The shale revolution in America meant that for much of last year, for the first time, natural gas replaced coal as the country’s main fuel for generating electricity. Britain plans to close all its coal-fired power stations by 2025, and on one day last week even it produced more power from solar than coal. In China coal use for its power supply fell in 2015 for the second year. On April 13th Greenpeace, an NGO, said China’s National Energy Administration had ordered 28 of 31 mainland provinces to suspend approval of new coal-fired power plants. India and China will keep using coal for decades, as they rely on it to generate about 70% of electricity. Had prices of gas and oil not fallen…you would not have seen such a reduction in use of thermal coal. Everything suggests a dark future for coal.

Jun 8th 2023 ECONOMIST 

In November 2021, at a un summit in Glasgow, the world’s leaders declared to much fanfare that they were consigning coal to the ash heap of history. Governments promised to stop building coal-fired power plants, and financiers pledged to stop financing coal mines. Eighteen months on, however, the world’s dirtiest fuel is still smoking. Russia’s invasion of Ukraine set off a scramble for fossil fuels, pushing coal consumption to record levels in 2022. Even though the energy shock has faded, global coal demand is still set to rise a little this year. If the increase in the world’s temperature is to be limited to 1.5°C, coal production must fall by more than two-thirds over the course of this decade. Instead it is projected to fall by less than a fifth.

One reason for the hopeful prediction of 2021 was the spate of commitments made by the world’s biggest banks and other lenders and investors. More than 200 mainly Western financiers have announced policies restricting investments in coal mining or coal-fired power plants. Lenders representing fully two-fifths of global banking assets have signed up to the Net-Zero Banking Alliance, which pledges to align portfolios with achieving net-zero emissions by 2050. The hope was that reducing the finance available for fossil fuels would help the world decarbonise by raising the cost of capital for projects, deterring investment and ultimately choking off supply. But the coal boom is exposing the flaws in this approach.

What is going wrong? For a start, the banks’ promises come with small print. Many pledges do not come into force until later in the decade; others cover only new customers or new mines, or exclude miners deriving only a portion of their revenues from coal. As a result, 60 large banks helped channel $13bn towards the world’s largest coal producers last year.

There are also limits to what a club of financial firms can achieve. Faced with criticism from Republican state lawmakers in America, who are threatening antitrust action against members of such clubs, many financial firms are becoming warier. Last month Allianz, axa and scor, three insurers, left the Net-Zero Insurance Alliance. Some had warned the club against toughening up its rules.

In any case, Western firms are not monopoly providers of finance. In the areas where they are lending less, such as for new mines, other providers of capital are rushing in. Banks in China and India, both big burners of coal, have no qualms about financing its extraction. Nor do those in producing countries such as Indonesia. Many are state-owned and happy to help secure energy supply. None has signed up to the Net-Zero alliance.

Another source of capital comes from private investors around the world. Some big oil and mining firms are disposing of their coal assets, but instead of being wound down these are being snapped up, and often expanded, by private funds. Britain’s first deep coal mine to be dug in decades, which received approval last year, is ultimately owned by private-equity investors. From Miami to Chicago, investors are expanding their coal holdings. Teck, a Canadian miner seeking to spin off its business supplying coal for steelmaking, this week said that it had received lots of interest from potential buyers.

Stuck in the coal hole

All this points to a fundamental problem of relying on finance to limit fossil fuels: it does not target the demand for them. For as long as demand is high, people can make a profit from investing in coal—and someone, somewhere will seek to do so. No one can say whether coal production would have been higher still, had Western banks not made their pledges. But it is also possible that such promises, by engendering a false sense of security, have prevented companies and—more importantly—governments from taking further action to bring down coal consumption.

Just as the simplest way to discourage smoking is to make it harder and costlier to buy cigarettes, rather than cutting off finance for big tobacco, so too the most effective way to kill coal is to curb demand for it. Making greener sources of energy cheaper, and encouraging investment in nuclear energy, would blunt coal’s appeal when the next energy shock hits. Properly pricing carbon, even if only in the West, would reduce global demand for fossil fuels; a carefully designed carbon border tariff, which taxed imports that use dirtier forms of energy, could encourage manufacturers around the world to clean up production.

Politicians have long looked for alternatives to such policies, which raise costs for consumers and so are likely to be unpopular. Some governments, outrageously, still subsidise the burning of coal. Instead, to kill King Coal, they must first make it more expensive. The time to start is now.