[Ed. note: Today’s’ blogs are the final ones for 2024. We will return January 2. Have a Happy and safe Holiday.]
If you end up with coal in your stocking this year, that might be a good thing… Conflicting information is inherent in ESG/sustainability and it can be difficult to determine what is true or most credible. Here’s a tough one – what is the near- to mid-term outlook on coal and related emissions reductions? Many companies’ Scope 2 reduction targets hinge on this very question. On one hand, The Hill reports that coal is already a stranded asset:
“American power producers over the past two years have accumulated massive amounts of coal that are now sitting idle at their facilities — creating financial and storage headaches for utilities and coal miners alike, a new analysis has found. The coal stockpile has reached about 138 million tons [estimated worth: $6.5 billion], or about the equivalent of the quantity of coal that Appalachia is expected to produce in 2025, according to the report, published Monday by the Institute for Energy Economics and Financial Analysis.”
On the other hand, a surge in electricity demand in the US means power producers need generation capacity right now. Wood Mackenzie said:
“Burgeoning data-centre development, a resurgence in energy-intensive US manufacturing, and greater transport and heating electrification will result in electricity demand growth not seen since the 1990s.”
Bloomberg Green wrote:
“… when faced with this sudden increase of load on the power grid, utilities are going to rely heavily on natural gas, and even coal… Power providers that have made pledges to cut back or eliminate carbon emissions are now starting to reverse course. Duke Energy Corp. is extending the life of its largest coal-fired power plant, abandoning its plan to exit coal by 2035 [See P.45 of this presentation]. FirstEnergy also will operate a pair of coal plants, stepping back from an earlier pledge to stop using the fuel by 2030.”
Finally, this from the International Energy Agency (IEA):
“Coal 2024 – the new edition of the IEA’s annual coal market report, which analyses the latest trends and updates medium-term forecasts – shows that global coal use has rebounded strongly after plummeting at the height of the pandemic. It is poised to rise to 8.77 billion tonnes in 2024, a record. According to the report, demand is set to stay close to this level through 2027…”
Who’s right? Today, perhaps coal is a stranded asset. In 2025 and some years after, it may almost be worth its weight in gold. That would be a setback for companies looking to their power utilities to move the needle on carbon emissions.
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