The burning of coal around the world marks a new record in the year of the war |  Economy

The burning of coal around the world marks a new record in the year of the war | Economy

In the midst of the era of renewables, the most polluting energy source also continues to grow. Coal burning will set a new record in 2022, a year in which the war in Ukraine has turned the European energy system upside down and forced an express search for alternatives to natural gas. The demand for the mineral will close the year with a growth of 1.2% on a global scale, according to the forecasts published this Friday by the International Energy Agency (IEA), which estimates its consumption at more than 8,000 million tons for the first time. . The energy arm of the Organization for Economic Cooperation and Development (OECD) believes that demand could still rise a little more in 2023 to stabilize in the following two years. The downward path will begin, at the earliest, in the second half of the decade.

The unprecedented burst of natural gas prices in Europe, where its price has risen fivefold in a matter of months, is one of the essential factors behind this increase in demand for this fuel, which, although it has also become more expensive, has done at a noticeably slower rate. “The Russian invasion of Ukraine has caused a sudden change in the dynamics of the coal market, its price and demand patterns,” explain the IEA technicians in the monograph presented this Friday. “There has been a shift away from gas, increasing demand for other more competitive options, such as coal.”

Despite the temporary growth in European demand for coal —both due to the substitution of gas and the French nuclear stoppage and the slowdown in hydroelectric generation caused by the drought—, and with some exceptions —Poland and Germany—, the use of coal in the Old Continent it will clearly tend downward in the medium and long term. Also in the United States, where despite the fact that it still generates more than a fifth of the electricity it consumes, its relative and absolute weight will fall sharply between now and 2025.

Quite the opposite occurs in the emerging world. China, which today gobbles up 53% of the coal burned in the world, will continue to increase its demand between now and the middle of the decade. Even greater will be the increase in India, which next year will become the most populous country on the planet. In both Asian giants, this solid fuel continues to be the “backbone of their energy system”: unlike what happens in the West, there the weight of gas is small and, despite the fact that renewables cover a large part of the growth of demand, are still far from replacing the thermal power plants built in recent decades. In addition to being the largest consumers of coal in the world, China and India are also the largest producers and importers of this mineral, whose disappearance from the world energy matrix is ​​essential to avoid the worst scenarios of climate change.

Reconfiguration of the world market

As with oil and gas, Western sanctions on Russia following the invasion of Ukraine have brought about a major reconfiguration of coal trade flows. The Eurasian country, the third largest producer on the planet, is having major problems when it comes to finding alternative buyers for the huge volume that it sold to EU countries until a few months ago. “Since there is no rail capacity, a part of the production that Russia previously sent to Europe cannot be redirected to the south or east,” the Paris-based agency’s report reads.

European buyers, for their part, are looking for new sources of supply, especially in South Africa, Colombia or Indonesia —in the latter case, despite the temporary interruption of their exports in the early stages of the year. Also in other smaller countries, such as Tanzania or Botswana. The result of this shock in the telluric currents of the world energy bazaar is none other than “a drop in Russian exports and a narrowing of the market.”

sluggish investment

All in all, and despite the resurgence in coal prices —which this 2022 has also marked its all-time high—, investment in new extractive projects is far from experiencing a new golden age. “An increase in interest in mines could have been expected, but, except in China and India, where domestic production has grown to reduce its dependence on foreign markets, there are no signs of a reversal of the previous trend,” the IEA concludes. “Governments, banks, investors and also mining companies continue to generally show a lack of appetite for coal investment.”

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