A new report expects that the use of coal globally will increase by more than 1% this year to exceed 8 billion metric tons for the first time ever. The use of coal has a significant impact on the environment, given that burning coal is the most polluting way to produce energy. Burning this fuel leads to the emission of carbon dioxide as well as toxic and carcinogenic substances into the air, land and water.
The U.S. Energy Information Administration has listed other emissions from coal combustion, which include sulfur dioxide, nitrogen oxides and particulates.
The International Energy Agency (IEA) report comes at a time of considerable uncertainty and volatility in energy markets globally. Ukraine’s invasion by Russia earlier this year disrupted the dynamics of coal demand and supply patterns as well as its trade this year, which had in turn put the use of coal on course to grow by 1.2%.
The IEA stated that fossil fuel prices had recorded a significant increase in 2022, highlighting that the sharpest increase had been observed in the price of natural gas. In its Coal 2022 report, the agency explained that this had led many to switch from gas and, in turn, had increased the demand for more price competitive fuel options like coal.
The IEA further indicated that despite this as well as strong deployment of renewables and energy efficiency, higher prices of coal and weakening economic growth globally were modulating the increase in overall demand for coal in 2022. It is expected that while the use of coal in generating electricity will increase by more than 2% in 2022, its use in industry will decline by more than 1% as a result of a decrease in the production of iron and steel.
In a statement, the director of energy markets and security at the IEA, Keisuke Sadamori, stated that the use of fossil fuels was almost at its peak globally and noted that the fuel’s demand would potentially hit a new high in 2022, causing global emissions to increase. Sadamori added that there were different signs that the current crisis was speeding up the deployment of heat pumps, renewable energies and energy efficiency, which would, in the coming years, moderate the demand for coal. He then stressed that government policies would be crucial in ensuring a sustainable and secure way forward.
The IEA predicts that the demand for coal globally will plateau near 8 billion metric tons in the short-term. This poses strategic questions for coal industry players such as Arch Resources Inc. (NYSE: ARCH) regarding their long-term future prospects.
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