Coal spending to surge as world shuns Russian gas
GLOBAL spending on coal projects is expected to surge by 10pc this year amid efforts to bolster energy security as Russia’s war on Ukraine adds to pressure on fuel markets.
The International Energy Agency (IEA) expects about $115bn (£93bn) to be invested on coal supply chains this year, up from around $105bn in 2021, which was itself about 10pc higher than the previous year.
The spending is being led by China and India, the IEA added, with the former trying to avoid a repeat of the electricity rationing it endured in 2021.
It comes despite international commitments made in October to “phase down” coal in power plants due to its carbon emissions.
“In some markets, energy security concerns and high prices are prompting higher investment in fossil fuel supplies, most notably on coal,” said the IEA’S executive director Fatih Birol.
He called for a “massive surge in investment to accelerate clean energy”, arguing that both energy security and global warming can be tackled “at the same time”.
The UK, Germany and the Netherlands are all leaning on coal as a back-up in case Russia goes further in cutting off gas supplies to Europe this winter.
The IEA said these markets were “not necessarily pushing up investments in coal supply”, with spending in coal held back in many areas by carbon regulations. Global energy markets have been strained since last summer as countries began to reopen from the pandemic amid global undersupply of natural gas.
High gas prices have pushed many countries back towards coal as an alternative fuel for power plants, although coal prices have also risen sharply.
Russia’s war on Ukraine has worsened the situation as traders start to shun one of the world’s largest suppliers of gas, coal and oil.
While high energy prices are causing “pain” for economies, they are set to more than double income in the oil and gas sector to $4trillion in 2022, Mr Birol added. He urged the sector to spend the “windfall gains” on shifting towards cleaner energy.