Investment in coal — the dirtiest fossil fuel — is set to rise 10% this year as energy security grows increasingly fragile due to the Ukraine war

·3-min read
A worker operates a JCB machine to load coal onto a goods train at the Amrapali coal mines in Peeparwar in India's Jharkhand state on April 30, 2022.
Coal — the most carbon intensive fossil fuel — is seeing a resurgence due to energy security fears.AFP/Getty Images
  • The International Energy Agency estimates investment in coal will jump 10% on-year in 2022.

  • A growing number of EU countries are planning a switch to coal as supply of natural gas comes under threat.

  • Investment in coal is led by China and India — the world's largest consumers.

Investment in coal is likely to jump 10% this year, as a growing number of countries race to secure alternative sources of fuel to improve energy security, which has been eroded by the Ukraine war, according to the International Energy Agency (IEA.)

"Russia's invasion of Ukraine has upended the fuel investment landscape and intensified a commodity price shock," said the IEA in its World Energy Investment 2022 report on Wednesday.

The global energy markets were already getting squeezed by the strong recovery in economic activity as coronavirus lockdowns eased and supply fell far short of demand. The war in Ukraine has only added to those concerns, given Russia's position as a major energy supplier and oil prices are up around 40% year-to-date as a result.

About $105 billion was invested in the coal supply chain in 2021, up 10% from 2002, according to the IEA, which advises Western governments on energy policy, and "tight supply continues to attract new projects," it added.

China and India are expected to lead the greater push into coal, given that they are the world's top two consumers.  China experienced power rationing and coal shortages last year, which made energy security a near-term priority for the government. India is looking to bump up domestic coal production to replace costlier imports to deal with power shortages, according to the IEA.

Coal is seeing a resurgence not just in China and India, but also in Europe, which gets 40% of its natural gas from Russia and which may now need to find alternative sources of fuel, given the risk of Moscow shutting off exports altogether.

Germany, Italy, Austria, and the Netherlands indicated recently coal-generated power could help them weather an energy crisis this coming winter. This is at odds with their commitment to cut back on the use of coal — the most polluting fossil fuel — and most European countries' plans to phase out coal-fired plants by 2030.

Although Europe is shifting to coal temporarily, it isn't investing more money in it, the IEA said. European countries import most of their coal from Russia, the US and Australia, according to Eurostat. The EU will ban Russian coal imports by August 10. South Africa is expected to be a major beneficiary from the shift, according to a Euractiv report last week. This demand has sent the price of coal for delivery in Europe up by about 150% this year.

Despite the shift back to coal in some countries, global investment in clean energy is finally ramping up after remaining flat for several years, noted the IEA. Clean energy investment is expected to exceed $1.4 trillion in 2022, while global energy investment will hit $2.4 trillion, marking a rise of 8%, the agency said.

Read the original article on Business Insider

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting