Coal Gets Hot

July 6, 2022

An energy-starved world is turning to coal as natural-gas and oil shortages exacerbated by Russia’s war against Ukraine lead countries back to the dirtiest fossil fuel. From the U.S. to Europe to China, the world’s largest economies are increasing coal purchases to ensure sufficient supplies of electricity, despite prior pledges by many countries to reduce their coal consumption to combat climate change.

“The global competition for coal—also now in short supply after years of declining investment in new mines and resources—has driven benchmark prices to new records this year,” reports The Wall Street Journal (July 5, 2022). The push is being led by Europe, which is boosting coal purchases to ensure it can keep power flowing to homes and factories after Russia cut gas supplies. Germany, which has promised to eliminate coal as a power source by 2030, is among the nations now importing more.

Trucks carrying coal in India, where coal powered generation hit a high this year.

Parts of the U.S. are boosting use of coal power, as high demand for electricity amid unusually hot temperatures pushes regional power grids to the brink of blackouts this summer. China, the world’s biggest coal consumer, is expanding production of the fuel and its use in power generation, spooked by shortages last year that caused country-wide electricity cuts and outages. India is also leaning hard on coal as energy demand increases.

Coal use fell in many major Western countries over the past decade, displaced by cleaner forms of energy that became more cost-competitive. Natural gas became more plentiful thanks to the American fracking boom and Russian exports to Europe. Wind and solar power also gained, buoyed by falling prices and government subsidies and mandates. In addition to Germany, Italy, France, the U.K., the Netherlands and Austria have now said they are preparing to restart coal-fired power plants, boost their production or keep them running longer than planned.

The resurgence of coal, which emits around double the carbon dioxide as natural gas, further threatens to set back international efforts to keep global temperatures under 2 degrees Celsius.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

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