Reports of coal shortages are not confined to Poland; demand for coal on the world markets is now truly hot.
According to the International Energy Agency (IEA), 8 billion tons of the black stuff will be consumed worldwide in 2022, an increase of 0.7 percent on 2021 which will also equal the record consumption of 2013. According to the IEA, that record will be broken next year.
The record consumption has been caused by the post-pandemic recovery. Even last year, the amount of energy generated from coal was up versus 2018. Demand is also rising as a result of the scramble by nations to ween themselves off Russian coal, which is now embargoed in Europe and North America. An economic boom coupled with a very hot summer in India, multiplying air conditioning and refrigeration needs, has also increased power consumption. The expected Chinese economic upturn in the second half of this year will further drive up demand for power.
While in the U.S., consumption of coal is due to fall by 4 percent, in Europe it is coming back big time. The forecast is for a rise of 7 percent, as Germany, Austria, France, Netherlands, and Poland are all abandoning mine closures and the shutting down of coal-fired power stations.
All this means a price hike. Back in February, the price of coal was still below $200 per ton. Last Friday, the price of coal in key European ports reached $340 per ton. No wonder Polish coal producers are looking for ways to cash in on a potentially buoyant export market.
It’s a great time to be selling coal, although not such a great time for those dependent on consuming it, be it for domestic heating or for coal-fired power stations. It is also not a great time for environmentalists seeing fossil fuel causing a bounce back of CO2 emissions and potentially weakening efforts to curb climate change.
The U.N.’s target was for a reduction in coal use of 6 percent each year. This was only realized as a result of the pandemic. For 2022, this target will not be met.
It is highly ironic that on Sunday we saw the 100th anniversary of Winston Churchill’s decision, taken when he was First Lord of the Admiralty, to substitute oil for coal as the fuel of choice for the British Navy. Even back then, coal seemed to be a fuel without a future, less effective than others. Indeed, oil, renewables, and gas looked to have trumped coal, but coal is still king and this year it owes its crowning glory to Mr. Putin and his war.
