Paris Deals Crushing Blow to Coal

As worldwide demand for coal stalls, some experts believe the industry is now in such dire straits that it won’t be able to compete with renewables in future.

After a decade of aggressive growth in demand, the market for coal has stalled and is unlikely to recover, according to the International Energy Agency (IEA).

Its report on the medium-term coal market says that demand in China - which uses 50% of the world’s coal - has begun to fall.  And while other growing economies such as India will use more, this will not make up the difference as worldwide demand will level off over the next five years.

But the outlook for coal could be even gloomier than the IEA suggests.  Its report was written before the outcome of the Paris Agreement on climate change, which led to some of the largest coal users vowed to cut their carbon dioxide emissions much further than many had predicted.

Other commentators believe that not only has global demand for coal already peaked, it will begin a steep downward trend, leaving most of the world’s coal in the ground.

Bleak outlook
The US-based Institute for Energy Economics and Financial Analysis believes the outlook for coal is bleak.  It says the Paris Agreement will accelerate the trend away from fossil fuels - and particularly coal - towards renewables, storage of energy and energy efficiency.

Its report talks of declining demand, excess supply, under-utilized rail and coal export terminals, excessive borrowing by companies, and stranded assets of coal still in the ground leaving losses for shareholders.

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