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U.S. coal prices have shot from just above $80 a ton when 2021 began to more than $230 now as the world’s post-COVID energy demand has strained producers of all kinds of fuel to keep up.
Last year saw the first increase in America’s coal production since 2014.
Peabody Energy, the world’s largest private coal producer, reported a record profit in 2021’s final quarter; second-biggest Arch Resources posted its best results since 2016.
Peabody’s share price has risen eightfold since January 2021. The company reported $513 million in net income in last year’s final quarter, compared to a loss of $129 million for the same period in 2020.
Arch posted profits of $227 million for the quarter, reversing a loss a year earlier.
Most U.S. coal production fuels electric generating plants, which have shifted to cheaper, cleaner natural gas in recent years. The U.S. coal output fell from 1 billion tons a year to half that.
In 2021, gas prices climbed higher and were in short supply as the COVID-era economic collapse shut down thousands of domestic wells.
When the economy sprang back, many power plants were forced to turn to coal to keep the electricity flowing because gas supplies were short, as well as more expensive than previously.
Domestic coal production will increase this year and next, the U.S. Energy Information Administration has forecast.
However, coal’s moment in the spotlight is unlikely to last, analysts and power company executives told the Financial Times.
About half of all U.S. coal-fired power plants are scheduled to be retired this decade, according to data from the Institute for Energy Economics and Financial Analysis.
Earlier this month, Duke Energy and Georgia announced they will mothball all coal-fired generation by 2035.
“Our customers have told us, and continue to tell us, that they want their energy from cleaner sources,” Duke vice-president Regis Repko said to the FT. “Those views translate to policymakers and investors.”
States also are enacting clean energy standards that are edging coal out of the energy marketplace.
“Maybe [coal producers] have gotten a reprieve for a year or two with prices being up as much as they are, but they’re going to be very shortly facing brutal economics once again as coal demand drops,” Seth Feaster, an analyst at IEEFA said in an FT interview.
Markets aboard offer U.S. coal the same limited future.
U.S. producers exported about 13 percent of their output in 2020, but the U.S. is one of the world’s highest-cost producers, making competition difficult against cheap miners such as Indonesia and Russia.
Instead, U.S. coal companies are focusing not on “thermal” coal, used to make heat that spins turbines in generating plants, but on “metallurgical” coal, a higher-priced version in demand by the steel industry and other metals makers.
Arch Resources is “managing the long-term wind-down of its legacy thermal assets,” the company said in its most recent annual report.
TREND FORECAST: Inflation and the costs of fighting the COVID War will keep coal in the energy mix longer and stronger than clean-power advocates expected.
As a result, the U.S. will fall even farther behind the Biden administration’s goal of halving the nation’s greenhouse gas emissions by 2030, a goal that was unrealistic to begin with.
While coal is enjoying a short-term surge as the world economy rights itself, the COVID era has left many developing nations destitute. For the foreseeable future, they will burn whatever fuel is cheapest and, in most cases, that is the lowest and dirtiest grades of coal.
The green dream of ridding the world of coal in the near future has become a victim of the COVID War.
TRENDPOST: As far as fighting climate change, the investment cartels have pumped in massive amounts of cash into the coal industry in recent years, according to Urgewald and Reclaim Finance.
They report that commercial banks channeled $1.5 trillion to the coal industry between January 2019 and November 2021… with financial institutions from the U.S., China, Japan, India, Canada and the U.K. accounting for over 80 percent of coal financing and investment.