Global dependency on coal returns amid growing energy crisis. Coal price to rise?

Key Takeaways:

  • Amid rising energy crisis, the world is turning to recently-shunned fossil fuels
  • Coal prices have gone up as European households look for cheap alternative to gas
  • Energy experts have demanded that the USA abandon its green policies for energy security
Coal prices will rise as global demand increases amid the energy crisis
Coal prices will rise as global demand increases amid the energy crisis. Pic Credit: Canva

YEREVAN (CoinChapter.com) — Amid a growing energy crisis fueled by the Russian invasion of Ukraine, industries and governments are turning back to coal. Oil and gas shortages, as a result of Western sanctions imposed on the Kremlin, are impacting coal prices. 

According to data by the US Energy Information Administration earlier this week, coal prices in the country crossed the $200 mark for the first time. 

In the final week of September, the spot price for coal in the Central Appalachian region jumped 3% to hit a new record of $204.95, according to a report by the Financial Times.  

In its Coal Market Update from July 2022, the International Energy Agency (IEA) predicted that the global consumption of coal would mirror the record highs from a decade ago. Based on current economic and market trends, the agency forecasted global coal consumption to rise by 0.7% in 2022 to 8 billion tonnes. 

“The global total would match the annual record set in 2013, and coal demand is likely to increase further next year to a new all-time high,” 

the IEA’s report read. 

According to reports, the price of thermal coal has already jumped around 170% since the end of 2021.

Europe wants energy giants to use coal for electricity supply

Hit by one of the worst energy crises in decades, Europe has little choice but to turn back to coal. Although the continent has vowed to phase out coal completely and shift to renewable forms of energy, that plan seems to be taking a back foot. 

European countries want to be coal neutral by 2030
European countries want to be coal neutral by 2030. Pic Credit: Europe Beyond Coal

Danish authorities have reportedly ordered energy firm Orsted to resume or continue operations at three fossil fuel-generating facilities. 

The Danish state, which is the biggest stakeholder in Orsted, wants “to ensure the security of the electricity supply in Denmark” ahead of winter. 

“This (order) applies to unit 3 at Esbjerg Power Station and unit 4 at Studstrup Power Station, which both use coal as their primary source of fuel, and unit 21 at Kyndby Peak Load Plant, which uses oil as fuel,” 

the announcement read. 

As per the press release by the company, the three units will remain in operation until 30 June 2024. Within the framework of making Orsted carbon neutral, the Government has slated Esbjerg Power Station for decommissioning on March 31, 2023.

The recent attack on the Nord Stream gas pipeline has forced Germany to turn back to coal for energy generation. The country had planned to abandon coal by 2030. 

According to a recent BBC report, households in the UK are also turning to coal in a bid to stay warm this winter. 

Amid the rise in coal demand, French President Emanuel Macron urged countries to avoid using fossil fuels whenever possible. 

“Our first collective battle is the eradication of coal. The crisis must not make us lose our way,”

 Macron told heads of states at the UN General Assembly last month. 

Recommended: Europe Stock Market Is In Trouble And Growing Worrying About Inflation

Experts urge the United States to embrace fossil fuels

Worried by the growing energy crisis in Europe, some people in the US have urged lawmakers to shun green policies. A coalition of six experts has reportedly written a letter to the US Congress expressing their concerns about the country’s energy security.  

“The actual environmental benefits of ‘green’ energy are few and far between, if there are any at all. Yet its economic and national security impact is immeasurably negative. Europe’s energy crisis sits as a clear and present warning of what may lie ahead if we continue down this road,

the experts wrote. 
Will the US succeed in reducing coal consumption and growing energy crisis?
Will the US succeed in reducing coal consumption? Credit: Twitter

As Europe’s energy crisis continues to send worrying signals, one can expect to see wider adoption of fossil fuels. As a result, the price of coal will rally, making it one of the most profitable assets for investors.

In the meantime, you can click here to find out which are the eight most crypto-friendly industries. The results will surprise you.

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