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Coal’s Recent Rise Isn’t Likely to Last

Coal’s Recent Rise Isn’t Likely to Last

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The world’s biggest coal users – China, the United States and India – have boosted coal mining in 2017, in an abrupt departure from last year’s record global decline for the heavily polluting fuel and a setback to efforts to rein in climate change emissions. Mining data reviewed by The Associated Press show that production through May is up by at least 121 million tons, or 6 percent, for the three countries compared to the same period last year. Whether coal’s comeback proves lasting has significant implications for long-term emission reduction targets, and for environmentalists’ hopes that China and India could emerge as leaders in battling climate change. While the U.S. reversal is expected to prove temporary, analysts agree that India’s use of coal will continue to grow. They’re divided on the forecast for China over the next decade.

The U.S., China and India combined produce about two-thirds of the coal mined worldwide, and the latter two nations also import coal to meet demand. India’s production expanded even during coal’s global downturn. “If you look at those three countries, everyone else is irrelevant in the scheme of things,” said Tim Buckley, energy finance director for the Institute for Energy Economics and Financial Analysis. World Coal Association Chief Executive Officer Benjamin Sporton acknowledged that it’s been “a difficult few years for coal” but argued that the market remains strong, particularly in China and India. Still, coal’s dominant role in providing electricity has been eroding. China now has more renewable energy than any other nation. Its Communist Party leaders have vowed to invest $360 billion in the sector through 2020.

India’s government has said it needs no more coal-powered power plants and last month canceled 13.7 gigawatts in proposed plants, enough to power more than 10 million homes if the plants ran at full capacity. It has promoted renewables with a raft of incentives and declared that power from some solar installations should be used first when demand goes up. Analysts said India is struggling to adjust to what appears to be a “new normal” – with its growth in electricity capacity outstripping the rise in demand. Manufacturing has not grown as quickly as hoped, and though transmission is steadily expanding to reach more households, 260 million Indians are still off-grid. As a result, the country’s power plants are running at below 60 percent of capacity on average – down from 2009, when India was using 75 percent of its capacity.

“The private sector is not undertaking any new investment in thermal energy” such as coal plants, said Ashok Khurana, director general of the Association of Power Producers in India. “There’s no sense in it.” Trump’s advocacy for reviving the coal-mining industry stands as an exception among the three nations’ leaders. Yet the U.S. also is where coal’s rebound could be briefest.

Cheap natural gas, a growing appetite for renewable energy and stricter pollution rules spurred utilities to shut down or announce retirements for several hundred U.S. coal plants. U.S. utilities that invested heavily in alternatives are considered unlikely to revert to coal, Roberts said, meaning market forces and not Trump’s politics will play the biggest role in determining the industry’s future. Buckley, the energy finance specialist, said he expects the mining increases of 2017 to emerge as an anomaly and global declines will soon resume. But he noted that many existing coal plants will continue operating for years to come. “We’re not talking about the end of coal tomorrow or the end of coal next decade. We’re talking about a 40-year transition,” he said.

Source:AP
Anand Gupta Editor - EQ Int'l Media Network

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