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Released January 02, 2024 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The estimated 70,000 people who attended the recent U.N. global climate summit known as COP 28 had barely returned to their countries before a new report arrived on the vibrant state of worldwide coal mine financing, the latest sign that the world is a long way from dethroning King Coal, either for electricity generation or steelmaking.
Bloomberg NEF released a report December 20 showing that banks arranged about $120 billion of financing for coal-mining projects around the world last year, equal to about 13% of all the financing arranged for fossil-fuel projects. That ratio needs to fall to just 1% at most by the 2040s to limit the impact of climate change, BNEF said.
It's getting harder to see how that's going to happen unless recent trends change on the demand and production of coal. Financial institutions will lend to or invest in projects that are projected to be profitable. It appears that the world continues to have a strong demand for coal. The BNEF report said that most of the financing for coal projects comes from China (about $93 billion in 2023), followed by the U.S. ($10 billion), and India and Germany ($3 billion each).
Despite the high-minded rhetoric from some at the U.N. global climate summit, the hand-wringing of environmental groups and the longstanding warnings from the International Energy Agency (IEA) (Paris, France) about the world's need to phase out coal, the Black Rock remains a fundamental part of most nations' electric fuel mix.
For more on these issues, see: June 12, 2023, article - Nations, States, Utilities Find It Hard to Stop Using Coal, and December 18, 2023, article -- IEA: New Record Level of Coal Use in 2023, but Slow Declines Seen over 2024-2026. For more on the U.N. climate summit, see December 15, 2023, article - U.N. Climate Summit Endorsed Transition Away from Fossil Fuels, but Questions Remain.
Industrial Info is tracking about 3,334 coal-mining projects under development around the world, valued at about $204 billion. The countries with the largest dollar value of coal mining projects under development are China, India, Australia and the U.S.
Click on the image at right to see a bar chart of the top 10 countries with coal-mining projects under development.
Of these 3,334 proposed coal-mining projects, approximately 1,575 are considered to have a "high" probability, meaning they have an 81% or better probability of moving forward, according to their current schedule. The value of these "high" probability coal-mining projects is about $85.7 billion.
Like tobacco and Twinkies, coal is a difficult habit to kick. Developing economies like China, Indonesia and India are using the Black Rock in growing numbers because it is plentiful domestically and relatively inexpensive. A recent article in The Wall Street Journal, "Billions in U.S. Funding Hasn't Convinced Developing World to Ditch Coal," showed why developing economies are finding it hard to reduce coal use.
"It is not particularly surprising that coal financing is robust given the world's reliance on coal for power generation and the continued growth in coal-fired generation in Asia," commented Joe Govreau, Industrial Info's vice president of research for the global Metals and Minerals industry. "China and India lead the world in adding coal-fired power generation. Also, in the EU, a good deal of coal retirements were delayed after war in Ukraine broke out and sanctions against Russia changed energy dynamics in that part of the world."
Geoffrey S. Lakings, an Industrial Info energy strategist, added this: "I find it odd that after the extreme events in 2023--floods, fires, tornadoes, hurricanes, typhoons, droughts and so on--that were made worse by global warming, as well as what was agreed to at COP28 and the regular warnings from climate scientists and the IEA, that financing coal mines remans a lively and profitable business."
Whether it is thermal coal or lignite for power generation, or metallurgical coal used in steelmaking, Lakings said the world's demand for coal appears to remain strong. Some of the steel being produced finds its way into wind turbines and solar arrays, as well as transmission towers, he added.
But he stressed there are good reasons for developing economies, no less than developed ones, to have coal as an option in their power generation portfolio, despite its contribution to global warming.
Despite the pre-COP28 talks by U.S. and China in Sunnylands, California, where the nations pledged to work together to counter global warming, Lakings noted that high-minded diplomatic statements can be overridden by economic imperatives.
"China and other developing economies," he said in an interview, "may be looking at Germany and other developed economies, who have been forced to retreat from bold decarbonization plans when other sources of dispatchable generation could not be built in time to ensure a reliable and resilient power supply."
For the majority of coal-mine financing to come from China is not that odd when considering how many coal mines China is developing domestically, he noted: In some ways, Chinese financial institutions are bankrolling Chinese industrial development.
As China and India's economies industrialize and grow, they require electricity that is reliable, resilient, secure and affordable, he commented. An environmentally benign source of electricity is a nice to have, but not as essential as one that is reliable, resilient, secure and affordable. "Energy security today, and electric reliability and resilience today, will triumph over global warming tomorrow every time."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Bloomberg NEF released a report December 20 showing that banks arranged about $120 billion of financing for coal-mining projects around the world last year, equal to about 13% of all the financing arranged for fossil-fuel projects. That ratio needs to fall to just 1% at most by the 2040s to limit the impact of climate change, BNEF said.
It's getting harder to see how that's going to happen unless recent trends change on the demand and production of coal. Financial institutions will lend to or invest in projects that are projected to be profitable. It appears that the world continues to have a strong demand for coal. The BNEF report said that most of the financing for coal projects comes from China (about $93 billion in 2023), followed by the U.S. ($10 billion), and India and Germany ($3 billion each).
Despite the high-minded rhetoric from some at the U.N. global climate summit, the hand-wringing of environmental groups and the longstanding warnings from the International Energy Agency (IEA) (Paris, France) about the world's need to phase out coal, the Black Rock remains a fundamental part of most nations' electric fuel mix.
For more on these issues, see: June 12, 2023, article - Nations, States, Utilities Find It Hard to Stop Using Coal, and December 18, 2023, article -- IEA: New Record Level of Coal Use in 2023, but Slow Declines Seen over 2024-2026. For more on the U.N. climate summit, see December 15, 2023, article - U.N. Climate Summit Endorsed Transition Away from Fossil Fuels, but Questions Remain.
Industrial Info is tracking about 3,334 coal-mining projects under development around the world, valued at about $204 billion. The countries with the largest dollar value of coal mining projects under development are China, India, Australia and the U.S.
Of these 3,334 proposed coal-mining projects, approximately 1,575 are considered to have a "high" probability, meaning they have an 81% or better probability of moving forward, according to their current schedule. The value of these "high" probability coal-mining projects is about $85.7 billion.
Like tobacco and Twinkies, coal is a difficult habit to kick. Developing economies like China, Indonesia and India are using the Black Rock in growing numbers because it is plentiful domestically and relatively inexpensive. A recent article in The Wall Street Journal, "Billions in U.S. Funding Hasn't Convinced Developing World to Ditch Coal," showed why developing economies are finding it hard to reduce coal use.
"It is not particularly surprising that coal financing is robust given the world's reliance on coal for power generation and the continued growth in coal-fired generation in Asia," commented Joe Govreau, Industrial Info's vice president of research for the global Metals and Minerals industry. "China and India lead the world in adding coal-fired power generation. Also, in the EU, a good deal of coal retirements were delayed after war in Ukraine broke out and sanctions against Russia changed energy dynamics in that part of the world."
Geoffrey S. Lakings, an Industrial Info energy strategist, added this: "I find it odd that after the extreme events in 2023--floods, fires, tornadoes, hurricanes, typhoons, droughts and so on--that were made worse by global warming, as well as what was agreed to at COP28 and the regular warnings from climate scientists and the IEA, that financing coal mines remans a lively and profitable business."
Whether it is thermal coal or lignite for power generation, or metallurgical coal used in steelmaking, Lakings said the world's demand for coal appears to remain strong. Some of the steel being produced finds its way into wind turbines and solar arrays, as well as transmission towers, he added.
But he stressed there are good reasons for developing economies, no less than developed ones, to have coal as an option in their power generation portfolio, despite its contribution to global warming.
Despite the pre-COP28 talks by U.S. and China in Sunnylands, California, where the nations pledged to work together to counter global warming, Lakings noted that high-minded diplomatic statements can be overridden by economic imperatives.
"China and other developing economies," he said in an interview, "may be looking at Germany and other developed economies, who have been forced to retreat from bold decarbonization plans when other sources of dispatchable generation could not be built in time to ensure a reliable and resilient power supply."
For the majority of coal-mine financing to come from China is not that odd when considering how many coal mines China is developing domestically, he noted: In some ways, Chinese financial institutions are bankrolling Chinese industrial development.
As China and India's economies industrialize and grow, they require electricity that is reliable, resilient, secure and affordable, he commented. An environmentally benign source of electricity is a nice to have, but not as essential as one that is reliable, resilient, secure and affordable. "Energy security today, and electric reliability and resilience today, will triumph over global warming tomorrow every time."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
