I have been asked my opinion of the future of the Coal Industry. This is a different question to those I normally answer, but I welcome the opportunity to comment.
I see the future of the coal industry as optimistic rather than pessimistic. The world is not about to stop making steel and they require coaking coal to do so.
What about thermal coal to produce electricity?
I am quoting form The Australian Newspaper when I say, “Banks, government institutions and investors are being pressured not to lend to coal through a highly organised campaign that mixes moral pressure with financial greenmail. However, the inconvenient truth for activists is that coal use is booming worldwide. It is in a renaissance, despite the forces ranged against it.”
So am I saying that demand for thermal coal will increase in future years?
Yes I am. It is an economic reality based on the abundance and cheap cost of coal. It provides 41% of the world electricity.
There is data on future demand: The International Energy Agency says global electricity from coal is expected to GROW by about 33% to 2040. Demand for coal in South East Asia alone is expected to increase by 4.8% per year through to 2035. This is an increase of about 5% per year for the next 20 years. How much would that increase the demand in South East Asia over the next 20 years? Well, if you compound a number at 5% it will increase by 60% in 10 years, 100% in just over 14 years and 265% in 20 years.
Yes, I am saying that the South East Asian demand for thermal coal could increase by 265% in 20 years based on the figures from the International Energy Agency.
Hard to believe?
Not really, when you consider the population growth in South East Asia, the millions of people who currently have no electricity and the growing prosperity of the region.
Is there any support for my views?
The World Coal Association, Chief Executive Benjamin Sporton said recently “1.3 billion people live in energy poverty and 2.7 billion (that is 2,700 million) people rely on dung and wood. Coal plays a critical role in bringing affordable, reliable electricity to hundreds of millions of people in developing and emerging economies, particularly across Asia.”
So, the bottom line is that, despite the continuing war of attrition from Environmental Groups, the future of the coal industry is assured.
Steve Taylor
At the helm of Steve Taylor & Partners, Steve Taylor has been delivering expert advice and product knowledge to clients for over 30 years. Steve Taylor & Partners provide individuals, couples and families with the right strategies to create wealth and change their lives with solid bricks and mortar.
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the subject being discussed.
