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Menopausal Mother Nature

News about Climate Change and our Planet

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Coal Stocks Rise, Even as the Planet Warms

These phenomenal stock returns are awkward, to say the least. The long-term needs of the planet are clear, if the world is to avoid the most catastrophic effects of climate change: Burn much less coal, and cut back on it as rapidly as possible.

Consider that the International Energy Agency has warned that all coal-fired power plants need to be shut down or retrofitted with carbon-capture technology within the next 20 years. Of all the stranded assets — those owned but unlikely ever to be used — held by fossil-fuel companies, coal is usually deemed most likely to be abandoned in the years ahead.

That dim outlook had weighed on coal company share prices in recent years. In Peabody’s case, the share price peaked above $42 in 2018, and then headed on a long trend downward. It scraped near $1 per share last year as the global recession reduced energy demand and electric utilities proceeded to phase out their most inefficient coal-fired power plants.

But that was then.

Now, with demand soaring and supplies constrained, the world is enduring something of a crisis — one that The Economist has labeled “the first big energy shock of the green era.” Despite significant global investments in green energy, the old standby fuels are in vogue again.

On Monday, a new report by the U.S. Energy Information Administration concluded that in 2021, “annual U.S. coal-fired electricity generation will increase for the first time since 2014,” a 21 percent increase over 2020. It expects that increase to be temporary.

But the world economy has been growing rapidly and there is an acute shortage of energy, particularly in China and in Europe. Natural gas in the United States has been relatively plentiful and cheap and has been displacing coal and oil as a source of electric generation. But its price has risen as supplies have tightened. That has increased demand for coal and contributed to the rise in coal prices, too. A cold, expensive winter is forecast for the United States.

As global energy demand has increased, coal exports from the United States to China and other regions have leapt. China relies heavily on coal for power generation. Already, it has begun rationing electricity, forcing a downturn in its factory production and worsening global supply chain troubles. Despite its stated commitment to curb greenhouse emissions, China has been scrambling to add coal supplies (along with cleaner fossil fuels like liquid natural gas and oil).

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