Example – a rapid decline of the coal market?
Generic product activity or name
Global coal market.
Context and background
The last few years have seen the consumption trends of coal being turned from a steady increase to a halt and most recently to a decreasing market trend – for the US and for the EU (Parker 2015). However, in Asia, most notably in China, the trend is still expected to increase or remain stable. But given coal’s contribution to climate change and the local pollution it generates it seems that even China is heading for a reduction in coal consumption on a slightly longer timeframe (Randall 2015).
This year the annual reports from the International Energy Agency (IEA) for the first time forecasts a decline in coal consumption (IEA 2015). It is too early to ascertain if these years are indeed the peak of global coal consumption – but in this example, which is thus partly hypothetical, we discuss a possible (near) future when the trend for coal will be rapidly declining.
Presentation of example
The current situation is such that prices for coal are dropping and investments in coal have also been reduced lately, both for monetary and for environmental reasons with environmental agencies in the US and in EU aiming to down-regulate the production (Randall 2015, Parker 2015). It has been speculated that the falling prices are likely to continue their downward spiral, as coal producers struggle to minimize their losses (Reuters 2015).
In such a market situation most coal producers are not likely to invest in new and more costly technology, and the marginal producers of coal that will be affected first will be the least competitive mines, typically deep or underground mining which have higher costs (Chen 2014).
Information sources used
The International Energy Agency is the reliable source for most up-to-date statistics on coal consumption.
Chen, X Y (2014). Why underground mines cost higher compared to surface coal mines. Market Realist. http://marketrealist.com/2014/04/the-high-cost-of-underground-mines-relative-to-surface-coal-mines/ (accessed 12. Oktober 2015).
IEA (2014). Global coal demand to reach 9 billion tonnes per year by 2019.
http://www.iea.org/newsroomandevents/pressreleases/2014/december/global-coal-demand-to-reach-9-billion-tonnes-per-year-by-2019.html (accessed 1. September 2015).
IEA (2015). Key Coal Trends 2015.
http://www.iea.org/publications/freepublications/publication/KeyCoalTrends.pdf (accessed 1. September 2015).
Reuters (2015). Is coals decline permanent? Reuters.com (accessed 1. September 2015).
Randall T (2015). The Latest Sign That Coal Is Getting Killed. Bloomberg Business news. http://www.renewableenergyworld.com/news/2015/07/the-latest-sign-that-coal-is-getting-killed.html. (accessed 1. September 2015).
Parker M (2015). Confronting coal. http://www.bloombergview.com/quicktake/confronting-coal. (accessed 1. September 2015).
Author of this example
How to reference this
Weidema B P (2014), Example –a rapid decline of the coal market? Version: 2015-09-01 www.consequential-lca.org