Coaltrans blog
Year round comment on the global coal markets, its participants and future

Coal is not in the best of places at the moment

Published March 2016 by Jonathan Rowland, Editor, World Coal 

 

Jonathan Rowland from World Coal is the Coaltrans guest blogger for the March 2016 edition

Slowdown in China, ultra-low gas prices in the US, strong and sticky supply and tightening environmental regulation: the issues are well known and make for a gloomy backdrop to kick off this new blog. 

 

But a negative is never a good place to start. Other contributors will, I’m sure, offer a more detailed look at the market winds buffeting coal at the moment. So I’d like to kick off with a more positive view, starting in the Networks Bar and Grill in downtown Phoenix, Arizona.

 

An odd place to start, you may think. But it was here that I recently had lunch with Fred Palmer, formerly Senior Vice President of Government Relations at Peabody Energy and now a Partner with US lobbying firm, Total Spectrum. Fred remains a passionate advocate for coal, pointing beyond the current market malaise and negative forecasts (after all, what forecast of 2011 correctly predicted where we would be in 2016?) to a fundamental demographic shift that will underpin demand for coal for a good while yet: urbanisation. 

 

In 1950 there were 746 million people living in cities around the world. Three quarters of a century later in 2014 and the UN estimated that the urban population had hit 3.9 billion. Fast-forward to 2050 and a further 2.5 billion will be added to the city-dwelling population – 90% of these in Africa and Asia. India alone will add 404 million people to its urban ranks. 

 

By the midpoint of this century, then, around two in three of us will live in cities. And generally speaking, this is a good thing. As the UN notes in its World Urbanisation Prospects report, the process of urbanisation is associated with longer life expectancy, higher levels of literacy and education, better healthcare and access to social services, and enhanced cultural and political participation – not to mention the fact that cities are significant engines of economic growth.1

 

But cities could not exist without coal: it provides the steel to build them and much of the electricity to power them. And that was Fred’s point, made over BBQ pulled pork and sweet potato fries in a desert city made possible by power from coal. It may now be popular to speak of coal’s inevitable decline – even to present this as a fait accompli – but unless we find a way of reversing the urbanisation tide (a Canute-ish task), coal will live a good deal longer yet.

 

Notes
United Nations, Department of Economic and Social Affairs, Population Division (2014). ‘World Urbanization Prospects: The 2014 Revision, Highlights’ (ST/ESA/SER.A/352), p. 3.

 

 

 

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