Coal prices have increased by 237% since May 2021. Experts predict that the worldwide demand for coal may peak in 2022 while the selling price may reach 500 USD/ton.
According to data from Trading Economic, the price of Brent crude oil on the morning of May 31 was $122.68 per barrel, up nearly 14% over the previous month and up 74.52% over the same period. WTI oil had a similar gain, of 14.1% month-on-month and 74.76% month-on-year, respectively.
Meanwhile, the price of natural gas also increased sharply, to $8.68 per million British thermal units (BTU), up 179.4% over the same period in 2021.
The sharp increase in crude oil and gas prices has caused “chaos” in the energy market during the past time. However, that increase is still not comparable to the type of energy that was once “criticized” by the whole world for being considered the “dirtyest” in the world: coal. According to TE data, the coal price on May 30 was recorded at $401/ton, up 33.76% month on month and 237.26% over the same period last year.
Coal prices have increased by more than 200% in the past year.
Coal price may surpass 500 USD/ton this year
According to Rystad Energy’s prediction in March, the price of coal could surpass 500 USD/ton in 2022, supported by high prices of other fuels, forcing countries to switch to coal.
On May 30, the EU announced that it had reached an agreement to embargo a part of Russia’s oil on May 30. Previously, EU countries also agreed to phase out coal imports from Russia. Russia now supplies more than 40% of the gas it produces to Europe, almost 25% of its crude oil exports and almost half of its coal.
March was also a period when the market saw a “vertical” increase in coal prices as Russia launched special military operations against Ukraine, causing the world to worry about a wide-ranging energy crisis. Coal price has increased in a row from 238 USD/ton on February 25 and peaked at 422.6 USD/ton on 7/3. Although then fell sharply at the end of March, coal prices have continued to “escalate” since then and are currently hovering around $400/ton.
Demand peaks in 2022
According to the IEA, coal power will reach a world record when the world economy recovers, pushing coal demand to an all-time high in 2022.
The amount of electricity generated from thermal power plants has increased by 9% this year. Previously, coal power fell 4% in 2022 as the global economy stalled, but the IEA found this year’s electricity demand has outstripped growth in low-emissions supplies, forcing economies to grow. Wealthy economies must depend more on fossil fuel power plants. The agency estimates coal demand, which includes the cement and steel industries, has grown by 6% this year.
The IEA report shows that India is on track to grow coal-fired power generation by 12% this year, while coal use in China’s thermal power plants is forecast to grow by 9%. This is an all-time high in both countries, despite impressive wind and solar project deployment, the IEA said.
In the US and Europe, coal power production is expected to increase 20% from the low of 2020, which is still lower than the level of 2019. Coal power use in these markets is expected to decline. in 2023 due to lower electricity demand and continued expansion of renewable energy solutions.
“Old King” is back
As the price of alternative fuels soars and supplies falter, governments around the world are once again looking to “dirty fuels” as they scramble to meet their growing demand.
Perhaps it is also time to acknowledge that the transition to clean energy will take time, possibly decades, and that governments need to be more pragmatic and flexible going forward. If coal were a boxer, it would be George Foreman – a retired underdog boxer who peaked years ago looking for a comeback.
For years, experts have declared humanity needs to turn to solar, hydro and wind power to tackle climate change. But how effective is it?
Look at Europe’s energy crisis.
Starting in 2009, the EU set a goal of phasing out coal-fired power plants in pursuit of the goal of slowing global warming. This effort is commendable. Coal plants across Europe are either shut down, half disappeared or are expected to close soon.
Power generation from wind and solar has skyrocketed over the past decade. However, these renewable energy sources are still essentially “uncontrollable” supplies. When the sun is not shining, the solar panels do not generate energy. When the wind is not blowing, the wind turbine also does not generate electricity.
This was the case in 2021 – due to extreme climate conditions, solar and wind power production plummeted in the US and Europe, leading to significant increases in the prices of fossil fuels such as coal and natural gas. tell.
At the COP26 climate summit in Grasgow in November 2021, at least 23 countries pledged to phase out coal power, including Southeast Asian countries and Europe. “I think we can say with confidence that coal is no longer king,” said COP26 President Alok Sharma.
Just four months later, the global energy landscape has changed dramatically, not in the direction Mr. Sharma had hoped. Global coal use rose to record levels that winter as renewables failed to keep up with demand.
That was before Russia entered Ukraine. The conflict has created a global crisis, forcing European countries to find a way to quickly cut down on Russia’s oil and gas, while also rethinking the timelines of commitments to cut fossil energy use.
This makes coal more important in the eyes of the great powers. It reaffirms that all resources – especially essential resources – must be viable options over which they can control.
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