The climate crisis notwithstanding, the current fuel crisis has led to a step back for many nations, particularly where the use of coal is concerned. Given how the current crisis between Russia and Ukraine has led to a shortage in natural gas exported by the former, coal producers are making a killing as countries need to resort to coal to sustain energy production.
The coal unit at commodities company Glencore Plc reported a surge of around 900% in its core earnings for the first half of 2022, beating out multinational consumer firms like Nike, Starbucks, and Unilever in terms of whole-year revenues. Meanwhile, profits for Coal India Ltd, the world’s leading coal producer, have gone up by nearly threefold; its Chinese counterparts, on the other hand, reported combined earnings of $80 billion for the first six months of this year.
A Renaissance for a Maligned Industry
Experts say it’s quite a leg up for coal production, seeing how many nations have opted to shun burning the material for fuel in favor of cleaner energy generation methods over the past decade. This resulted in a halt in financing, divestiture of mines and power plants, and a universal agreement at COP26 last year to completely end the use of coal in power generation and heavy industry.
Oddly enough, these setbacks actually formed the basis for the coal sector’s resurgence. A need to reduce or completely end reliance on Russian gas has prompted some EU countries to import additional stocks of both seaborne coal as well as natural gas. Indeed, this led to coal prices surging to record levels for Australia’s Newcastle port – Asia’s primary importation zone – last month.
Potential Political and Environmental Repercussions
On a political level, however, the record earnings of several coal companies may be called into question as the price of production and power generation are being passed on to consumers.
Presently, the cost of electrical power throughout Europe is hitting record highs, while power companies in developing nations worldwide are forced to stagger the delivery of power through rolling blackouts as fuel procurement becomes increasingly difficult.
This crisis was enough to prompt a call-out against power companies by no less than UN Secretary-General Antonio Guterres, who has called for windfall taxes against their mounting profits, which, in his words, were immoral.
Likewise, experts warn that falling back on coal will seriously set back the climate or carbon-neutrality goals that many nations have set for themselves by 2025 or 2030. It also throws a wrench into the push toward keeping global warming down to less than 1.5 degrees Celsius over the next several years.