From the US to China and India, the coal sector is under fire, fuelling hopes the industry has entered a period of terminal decline. It wasn’t the best start of 2016 for the global coal industry. It kicked off with reports from China that the government’s ongoing air pollution crackdown will see it close over 1,000 coal mines this year and effectively ban any new coal mine development until 2019 at the earliest. China’s promise to peak greenhouse emissions by around 2030 and its accompanying clean tech investment spree has led to a slowdown in the country’s giant coal market the pace of which has taken all observers by surprise. Meanwhile, hopes that the global coal market would be bailed out by the emerging superpower that is India received a further blow last week as new figures suggested a sharp reduction in the amount of coal the country is importing. According to local media reports, imports fell 34 per cent year-on-year in December continuing a trend that has seen imports fall 15 per cent over year-on-year over the past nine months. This decline is offset to a considerable degree by increased domestic coal production in India, which is being driven by government plans to meet soaring energy demand through a mix of coal and renewables. However, as Tim Buckley, director of energy finance studies at the IEEFA think tank, noted last week there are signs renewables could quickly start to out-compete coal across India. According to the think tank coal plant utilisation rates in India have fallen from 66 per cent three years ago to under 60 per cent this year. Meanwhile, competition from solar power is intensifying. Buckley is sceptical the Indian coal import market will ever recover. “India was essentially the last flame of hope for the beleaguered seaborne thermal coal industry,” he said. “December’s import data confirms the last flicker has been snuffed out, not least for Australia’s Galilee Basin. Indian thermal coal imports look to have peaked in mid-2015, and are now set to permanently and rapidly decline. The IEA’s forecast of sustained thermal coal import growth into India looks outdated even as the latest 2015 report was printed.” Rounding off a tough start to the year for coal firms, late last week new figures from the US Energy Information Adminstration (EIA) revealed US coal production is now at its lowest level since the mid-1980s. An update from the agency confirmed US coal production peaked in 2008 and has been in decline ever since. “US coal production in 2015 is expected to be about 900 million short tons (MMst), 10 per cent lower than in 2014 and the lowest level since 1986,” the EIA said. “Regionally, production from the Appalachian Basin has fallen the most. Low natural gas prices, lower international coal demand, and environmental regulations have contributed to declining US coal production.” There was no respite for US coal producers from the export market. “Although 15.7 MMst of coal was exported to the United Kingdom and Italy in 2014, only about half that volume is expected in 2015, when complete data are available,” the EIA said. There was a similar drop in demand from China and overall the EIA now expects US coal exports to fall 21 per cent in 2015 to MMst. It is easy to see why valuations for coal companies are continuing to fall. Coal may remain one of the world’s primary sources of energy and it will take decades for unabated coal power plants to be removed from the grid. But in all of the world’s major markets the sector is being squeezed by a combination of environmental regulation, renewables, and intense competition from gas. The EIA said that in April 2015, natural gas-fired electricity generation surpassed that of coal-fired generation on a monthly basis for the first time in history, and it did so again in each of the months from July through at least October, the latest monthly data available. There are no sign of any of these trends wavering, particularly in the wake of a Paris Agreement that commits all nations to curbing their carbon emissions. The UK recently declared it would phase out all unabated coal power plants and is hoping to see other nations follow suit. The industry is hoping that emerging markets could drive its revival, but while the coal market is evidently increasingly reliant on the likes of India and Indonesia there are still considerable challenges for the sector, not least in the form of commitments from the World Bank and others to only invest in coal infrastructure in extreme circumstances. In the wake of the Paris Summit a leaked email from Brian Ricketts, secretary-general of the European Association for Coal and Lignite, ranted about how fossil fuels had been “portrayed as public enemy number one” and the coal industry was at risk of being “hated and vilified in the same way that slave traders were once hated and vilified”. However, if the latest figures are to be believed it is not necessarily public condemnation the coal industry should be worried about, so much as simple economic forces. If there really is a war on coal underway there appears to be only one winner, and it is not King Coal.  

Energy infrastructure firm says biogas is becoming an important part of the UK energy mix. Energy infrastructure firm Fulcrum has announced it is to target the UK’s expanding renewables market by providing pipes to link anaerobic digestion (AD) plants to the gas network. The new venture, which will see Fulcrum fit pipes to feed biogas into the UK gas distribution network, marks an expansion of its core business of linking homes and businesses to the gas network. “Biogas is becoming an important part of the UK’s energy mix and there is real potential for it to take an even greater role in the future,” Martin Donnachie, Fulcrum’s chief executive, in a statement. The Sheffield-based firm has previously delivered a series of high profile projects, including providing gas infrastructure for the Olympic Park, Athletes Village and the Olympic Cauldron for the London 2012 games. It is also contracted by British Gas to provide connections to properties until at least 2018. Donnachie said Fulcrum’s gas infrastructure experience means it is well placed to also support AD operators in the construction and commissioning of new plants. “Our track record in the gas industry, together with our excellent working relationship with the Gas Networks, will be of real benefit to the sector and support its ambitions to increase its contribution to the UK’s energy requirements,” he said. Biogas is a methane rich gas created from the anaerobic digestion of sewage, food and industrial waste. Figures released by DECC last summer showed AD capacity outside of the water industry increased by nearly a third during 2014, from 164MW to 216MW. Meanwhile, industry insiders say the recent increase in funding for biogas projects through the Renewable Heat Incentive (RHI) scheme could result in a major rise in the number of AD plants in the coming years from the 40 currently to around 180 by 2021.