Coal power has been a fact of life since the dawn of the industrial era. The dense concentration of energy within coal, plus its extreme portability, makes it the ideal fuel to generate heat and electricity. But king coal’s days at the top of the United States power matrix are numbered.
Partly, this pending change is due to regulatory shifts. Successive American administrations have increased emission regulations, adding ever-mounting marginal costs.
But the real silver bullet has been America’s shale revolution. So long as global oil prices are high, drillers are seeking shale oil above all else. What natural gas comes out – and nearly every oil well produces some natural gas – is a waste product that gets fed into the country’s natural gas distribution network. Consequently, natural gas prices have fallen to sustained lows, and natural gas steadily is eating away at coal’s market share. Add in ever-tightening regulation, and coal will be but a marginal fuel within two decades.
The same is not true, however, elsewhere. Europe’s environmental policies have left the continent saddled with a power sector that is expensive, underperforming and inappropriate for European power needs. Russia’s resurgence has laid waste to the concept that European energy had evolved beyond geopolitics. This leaves Europe with a choice: go dark or use coal. Already, coal use in Europe has returned to levels not seen in more than 30 years.
A similar impact has been witnessed in Japan, where in the aftermath of the Fukushima disaster, nuclear power is being abandoned large-scale. Coal is helping fill the void. Elsewhere in the world, coal never fell out of favor as it did in the West. But most important, as the global trade order weakens, countries that wish to continue to have electricity will need to use fuels that are closer to home. Unlike oil or natural gas (or uranium), coal is almost everywhere.