The future of coal is damned, a new report by Bretton Woods’ institution, the World Bank, has said.
Specifically, global coal consumption is in dire strait of long-term structural decline as consuming regions are increasingly leaning towards cleaner energy initiatives, the World Bank stated in the commodity report.
The report which tied the development to both economic and policy reasons said countries, including the world’s largest economy, United States, have experienced huge divestment in coal supply because low-priced natural gas has reduced coal usage in power generation.
China is also investing in cleaner energy sources, reforming its electricity sector to reduce inefficient production, and reducing the energy intensity of its economy at the expense of coal.
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In early February, the Chinese government capped the coal import price at around $118 per metric tonne to encourage domestic production and curtail coal imports. Coal prices have since declined as the boost from winter demand has waned.
Meanwhile, several European countries plan to end coal consumption over the next decade, and India is seeking to reach peak coal consumption over the same period.
The bank projected that coal prices will average $85 per metric tonne in 2018, a slight shift from 2017, as inventories are replenished and consumption is curtailed.
China, which accounts for more than half of global coal consumption, is expected to be a key driver of coal prices in the seaborne market, as it reforms its energy sector away from coal toward cleaner-burning fuels.
Coal prices rose four percent in the first quarter, following a surge of 34 percent in 2017, mainly due to strong consumption in China spurred by cold weather, low inventories and production constraints.