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Strong demand for coal could mean profits for those investing in the industry

by , 02 July 2014

There continues to be a growing focus on renewable and clean energy. If someone asked you what the quickest growing energy source is at the moment, you'd be mistaken to answer solar or wind. The fact is, it's coal. Yes, it isn't a clean energy source, but it's one of the cheapest. And this has led to an explosion in its use. Let's take a closer look at what's going on…

Boom times look afoot for coal producers

Coal producers look set to benefit from the continued rise in the use of coal. Last year alone, coal consumption across the world grew 3%.

This means that coal was responsible for 30.1% of the world’s energy, Sean Brodrick in Investment U explains. That’s just 2.8% behind crude oil, BP revealed in a new report.

Check out the chart below showing the consumption of coal on the rise…

Chart of coal consumption

The top three users of coal are:
  • China;
  • The US; and
  • India.
Coal made up 67.5% of energy demand in China last year. The percentage of energy generated from coal is actually down, but the energy required is up. So even though coal doesn’t account for just as big a part of the energy pie, its use is still growing.

As the world’s energy needs grow so does its need for coal

Last year, the world’s energy usage rose 2.3%. That’s up 0.5% on 2012.

In the US, coal accounts for 39% of its electricity. And even though the US government tightened up on its pollution targets concerning carbon dioxide, it didn’t make any changes to those pertaining to coal pollutants.

The use of coal in the US should fall by around 25% in six years, but the States will continue to use a lot of it. Even by 2030, coal will produce about 30% of its electricity.

What’s more, it looks like other emerging markets are going to continue to increase their use of coal.

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Yet, regardless of the various fundamentals backing a strong case for the future of coal, the coal price is nearing a five year low.

Coal producers have struggled as the coal price has plummeted. But it looks like the industry is set for a strong recovery.

So there you have it, strong demand for coal could mean profits for those investing in the industry.



Strong demand for coal could mean profits for those investing in the industry
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