Friday, 15 April 2016

Peak Coal: the end of coal?

The death of king coal has been anticipated for some time:
Futures Forum: Peak coal: carbon capture or the 'long sunset' of cheap coal?
Futures Forum: Peak coal > peak shale oil > peak gas >>> peak fossil fuels

An extraordinary thing has happened in the energy sector:
Peabody, world's largest private coal company, files for bankruptcy
Peabody Energy's Chapter 11 tops a string of U.S. coal bankruptcies | Business | stltoday.com

This overview is from the New Economics Foundation:

Energy round-up: end of coal?

Photo credit:   Bart Bernardes

Peabody Energy, the world’s largest privately-held coal producer, has filed for Chapter 11 bankruptcy, capping the end of a terrible five-year slide.
Financial problems are rife across the entire coal industry: incredibly, the four largest US coal miners by output have seen their value fall by 99.6% since 2011 – their combined worth dropping from $34 billion at their peak to just $150 million today.
When the economics of the energy industry change, things change quickly (don’t miss the extra links this week on the dramatic changes following the end of the UK feed-in tariff and the Australian carbon tax).
The main problem for Peabody – and there were many problems – is that it didn’t shift its business model in the face of changing circumstances, and investors went along for the ride. As coal prices fell over the past couple years the company promised investors that market fundamentals were “set to improve”, but the coal price has continued to fall into 2016.
For coal producers, we are living in very troubling times. Past theories have warned of a peak in energy resources, but there is now a very real risk of a peak in demand for coal. As a result, much of the world is facing energy abundance and low prices.
There is also the fact that coal, in particular metallurgical coal, is used for steel production. China, still the world’s steel giant, just isn’t making as much steel as it used to as its economy shifts from industry to services and as the rate of new construction – and its population growth – slows.
A more forgivable oversight perhaps, although it is something NEF has explored, is the slowdown in global growth, which directly reduces energy demand.
Importantly none of these trends show signs of letting up any time soon. Just this week the IMF announced a downgrade in its short term global economic forecast.
The oil majors may be feeling fortunate looking at the series of coal majors biting the dust, but their business model is much the same and their financials aren’t exactly healthy. With BP in the news this week as shareholders have called out the company for banking its future on 4-6 degrees of warming despite Paris pledges, are their investors really any wiser?

Don't miss these:

  • A brief history of the coal price and Peabody Energy’s fatal optimism
A brief history of the coal price and Peabody Energy’s fatal optimism
  • Read our new report on how London can create a clean, affordable and democratic energy provider

In other news…

What to do with carbon revenues?
study by EcoFiscal in Canada shows that the options for distributing the revenues of a carbon tax have little impact on emissions reductions, but a large impact on public support.
Australian electric emissions soar after carbon tax removal
After a decade of falling energy use and greenhouse emissions, Australianelectricity emissions rose by 5.5% last year. This was the first year since the removal of Australia’s carbon tax.
Tesla’s big announcement
Pre-orders of Tesla’s Model 3 – an electric car that doesn’t yet exist – were through the roof, surprising everyone including the company. The Washington Post has a run down on what this means for the planetwhile India has joined Norway and the Netherlands in stating when it willcompletely phase out diesel and gasoline vehicles (2025, 2030 and 2030, respectively).
Earth gets the wobbles
Nasa has concluded that melting ice sheets from global warming are changing the way the Earth wobbles on its axis. As these melting ice sheets are concentrated in certain areas, particularly Greenland, the distribution of the weight of the earth is altered.
Impact of Brexit on energy and climate change
The think tanks Green Alliance and E3G have published a briefing paper exploring the impact of Brexit on energy and climate change. The paper highlights risks covering access to the EU energy market, access to European export markets for clean technologies, and influence at international climate negotiations.
Big Oil lobbying
study by Influence Map calculates that ExxonMobil, Royal Dutch/Shell and three oil-industry groups together spend $115 million (£81 million) a year on advocacy designed to obstruct climate change policy.

Energy round-up: end of coal? | New Economics Foundation

See also:
Futures Forum: "The disingenuous campaign to promote coal as the solution to energy poverty"

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