Given the increasing willingness of governments and businesses to begin addressing carbon intensity, this news will come as no surprise to most.
While the global coal industry is still trying to be optimistic that the price and demand for coal will pick up soon, US banking behemoth Citigroup is less than convinced. A new report from Citigroup predicts the coal industry is in for continued pain, including an acceleration of coal mine closures, liquidations and bankruptcies, RTCC has reported.
In 2015 the value of publicly listed coal companies tracked by Citigroup fell to $18 billion, down from $50 billion just 3 years ago. The banking giant predicts this fall will continue, with “current market conditions likely to persist.”
Citigroup indicates that a politically driven decline in investor appetite for coal is helping to drive a transition to lower-carbon energy sources worldwide. The very slow progress of much-touted, commercially viable carbon capture and storage technology (CCS), or “clean coal,” is not helping the coal industry’s prospects. Investors are realising that CCS is unlikely to play a major role in keeping the industry afloat. At the same time, global renewable energy development is growing exponentially. The coal industry is running out of time.
Citigroup cites that big miners such as Rio Tinto, Anglo American and BHP Billiton are rationalising their plans, to try and cope with the expected decline. Demand for coal in Asia is still reasonably strong, but many countries around the world, including in Asia and notably China, are addressing their emissions intensity in the face of accelerating climate change. Progress at the major international climate change summit in Paris later this year could further hamper the industry.
This growing political willingness from major emitters to seriously address their carbon emissions does not bode well for the future of the coal industry.