Coal – the Biggest Fuel
The recent travails of coal companies in the USA due to low natural gas prices has led many people to think that the days of coal are over. However many people are missing the fact that there are massive coal shortages in India and China. These emerging giants depend on coal for more than 50% of their energy requirements and this is growing by the day. The cheapness of coal which is its biggest advantage has made these countries disregard the disadvantages. Coal is the cheapest source of fuel supply for electricity generating plants with thermal power costing as low s 2-4c/KwH. This means that more coal powered plants are being built each day increasing the reliance on coal.
Investing in Coal remains a great idea as coal deposits are being searched and acquired by companies looking to benefit from the growing coal hunger. The problems of the US coal companies is due to inadequate transportation facilities to move coal from mines to coast. However even that is changing with companies investing in rail and port facilities to move the coal to India and China. Coal is going to be the biggest fuel source in the next couple of years displacing oil as more and more electricity gets generated through burning of coal.
More on Investing in Coal
Coal is the biggest source of Energy for Electricity Production in the world and its use is expected to continue to grow to 44% of the Electricity Production by 2030 (IEA). Despite Coal having many dangerous disadvantages, its advantage of cheapness and abundance has made it the Fossil Fuel of choice. With global reserves estimated to be around 200 years, it does not have the “peak oil” characteristics as well. Though not a Coal Fan, nonetheless Coal stocks are a great investment choice due to the fact of its growing demand which is outstripping supply. China and India are massively growing their electricity, steel and cement production which requires billions of tons of coal. China consumes almost 45% of the global coal production while Indian demand is growing by leaps and demands as well. Indian Power Utilities are grabbing up Coal Mines in Africa, Australia and Asia to secure feedstock for their gigawatt thermal power plants. Despite its growing importance Coal does not have a lot of choice in terms of investment unlike Fossil Fuels like Oil and Gas. There are a number of Coal Stocks which one can invest in and the sole Coal ETF – Market Vectors Coal ETF (KOL).
US Coal losing out to Natural Gas
US Coal Companies are being forced to close coal mines and reduce production because of a massive glut of cheap natural gas and emission standards. Note Coal Disadvantages are much more than that of other fossil fuels making it the dirtiest form of energy. While India and China face massive coal shortages, USA on the other hand faces a glut. Coal has been coming under increasing attack in the West with few new thermal plants being opened and many closed due to tougher pollution standards. Note Clean Coal Technologies and CCS is being promoted to prolong the use of Coal but they are not getting much traction.
We face a 2 track world where in USA, Energy has become cheap because of the Shale Gas Technology while it increases in Asia. While Indian Power Companies are desperately scouting for coal resources, US companies are being forced to shutter mines.
U.S.-based FJS Energy LLC, on Thursday, announced a multi-year coal sale and purchase agreement worth $7 billion with India’s Abhijeet Group giving India access to American coal for the next 25 years.The coal, under the deal, will be primarily for steel production and power generation in India. The coal would be sourced from FJS Energy’s affiliates, FJSE Marshall Inc. and FJSE River Coal.
Also read List of Coal Companies in India.