The International Energy Agency has warned against recovering using fossil fuels after the pandemic, and the United Nations Secretary-General has called on all countries to get rid of “coal dependence”. But the production of climate change is increasing.
Coal demand, price and production have risen sharply in the past year. The price of one ton of Australian Newcastle coal, the standard for large parts of the Asian market, has more than tripled in the past year.
The Newcastle (NEWC) index rose from a low of $46 in September of last year to now reach a full $170 per ton.
This is the highest price for coal in more than a decade.
In parallel, oil and gas prices rose sharply in the past year, despite the drop in the price of oil in recent weeks. For the gas market, there were record prices this summer.
China’s rapid growth drives up prices
What is likely driving up the price of coal is that electricity consumption is growing exponentially in China. It’s so huge, and only so far this year, the growth in thermal power production corresponds to all of Germany’s energy consumption in one year, says Sigbjørn Seland, senior analyst at Stormgeo Nena (Nordic Energy Analysis).
He points out that more than half of the energy production is coal energy.
Overall, there’s also an overheating commodity market and steep price hikes across the board, and coal is part of that picture, Sealand says.
The chief analyst does not expect a decline in coal prices in the near future.
– There is no reason to expect that. I would think that the price hike is likely to continue. Sealand says there is a cap, but the price of coal has been a lot higher in the past, so there’s no doubt it could go up a bit more.
Historic increase in carbon dioxide emissions
Already in April of this year, the International Energy Agency (IEA) joined a report Which stated that the world is likely to experience the largest annual increase in CO2 emissions of all time in 2021.
Increased demand for coal in electricity production has been cited as the critical driver.
The Director-General of the International Energy Agency, Fatih Birol, came at the same time with a clear warning to the world’s economies:
– Birol said in the report that the economic recovery after the virus crisis is currently not sustainable for the climate.
Since then, demand for coal has skyrocketed, and there is little sign of production falling.
Waiting for coal stock to be filled
The US Energy Information Agency (EIA) is waiting Increasing coal productionIt is believed that the need is so great that stocks are greatly depleted.
They are seeing a 13 percent increase in production for 2021 compared to last year.
There is a bad climate benefit in the wake of a sensational climate report, in which the United Nations Climate Panel concluded we could already see 1.5 degrees in 2030.
United Nations Secretary-General António Guterres previously said,The phase-out of coal from the electricity sector as the most important step towards reaching the 1.5 degree targetHe encouraged all countries to abandon their planned coal projects.
It is important that we do not invest more in fossil energy
The coal rally isn’t unexpected, but it’s certainly worrisome, says Thena Saltvedt, senior analyst for sustainable finance at Nordea.
She believes that it is now important to take measures to counter development.
We must help where there is a great need and where it is most needed, says Saltvedt.
She points out that it is particularly emerging economies, such as China and India, that are now sharply increasing coal production to achieve a rapid recovery in the economy. Saltvedt stresses that renewable alternatives are still not competitive here.
When it’s not competitive, we should come up with support packages that make countries choose renewables, you think.
Green support packages, rising carbon dioxide prices and investments in renewable energy, rather than fossil energy, the economist points out, are important measures, in addition to the fact that renewable energy should be available to everyone.
Saltvedt believes it is particularly important to avoid investments in new coal-fired power plants, as this locks economies into coal for decades to come.
When it comes to further development, one thing is for sure.
– As long as we continue to open economies, the demand for energy will continue to increase, according to the state of Saltvedt.
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