COAL - THE ONCE AND FUTURE ENERGY KING

Coal was once the major source of energy. However, as people discovered the flexibility of petroleum, especially in vehicles, oil took over as the world's major energy source. But, those days may be quickly ending and coal may return to its role as the king of energy.

Experts are predicting that coal may rival oil as the world's biggest energy source within five years. Maria van der Hoeven, executive director of the International Energy Agency (IEA) said, "Coal's share of the global energy mix continues to grow each year…coal will catch oil within a decade." One of the biggest factors behind the rise in coal use has been the massive increase in the use of shale gas in the US, which has lowered demand for coal in the US, depressed international coal prices, and made it more attractive elsewhere.

Coal consumption is increasing all over the world. Even in parts of the world where coal consumption has been discouraged like Europe, coal demand is up. In Europe, an emissions trading scheme was supposed to discourage coal power generation by imposing a price on carbon dioxide emissions. But the effects of the financial crisis and recession have caused a plunge in permit prices.

Coal is abundant, found in most regions of the world, and unlike conventional oil and gas, and can be inexpensively mined. As a result, coal was used to meet nearly half of the rise in demand for energy globally in the past decade. According to the IEA, demand from China and India will drive world coal use in the coming five years, with India on course to overtake the US as the world's second biggest consumer. China is the biggest coal importer, and Indonesia the biggest exporter, having temporarily overtaken Australia.

According to the IEA's "Medium Term Coal Market Report," published in December, the world will burn 1.2 billion more tons of coal per year by 2017 compared with today - the equivalent of the current coal consumption of Russia and the US combined. Global coal consumption is forecast to reach 4.3 billion tons of oil equivalent by 2017, while oil consumption is forecast to reach 4.4 billion tons by the same date.

The Coal Consumers of Asia

As the Asian economic tigers grow, so does their demand for coal. India is not only a major coal user, it is rapidly increasing its coal imports as a growing middle class demands more electricity. In September 2012, India imported 9.6 million metric tons of coal - a 7% increase from September 2011. The Indian government predicts that coal imports in 2013 will reach 185 million metric tons.

The bulk of India's imported coal is a low grade coal from Indonesia, which is used for electrical power generation. Standard grade South African coal is used by the makers of cement and sponge iron. Sponge iron, used by steelmakers along with scrap metal, is made by directly reducing pelletized iron ore in a furnace with regular coal rather than in a blast furnace with much more expensive metallurgical coal.

China is also gobbling up coal. In China, demand for coal in 2010 resulted in a traffic jam 75 miles long caused by more than 10,000 trucks carrying supplies from Inner Mongolia. Why, in the age of new technology and renewable energy, is coal making a comeback? Two words - cheap and reliable. Burning coal still costs about one-third as much as using renewable energy like wind or solar.

Coal is not subject to the vagaries of windless or sunless days, and can easily meet base-load demands of electricity consumers without interruption. Coal is also widely available, easy to ship and easy to use.
Although coal is a reliable energy source, some of the coal export countries may not be. China is trying to modernize coal mining in Inner Mongolia, but its demand for coal is exceeding the capacity of these remote coal operations.

Other countries are also unable to meet the growing demand, which may benefit American firms. South Africa, which has been a major coal exporter to India, is experiencing major labor unrest. Meanwhile, Australia, traditionally the world's largest coal exporter, faces new shipping regulations because Australians worry that the Great Barrier Reef might be damaged as coal bearing ships pass by it.