Globalised coal crisis: The supply and demand imbalance

The Eurozone is facing record inflation at a 13-year high. Britain is going through a lack of manpower with fuel pumps running dry. South America is facing blackout, and the North Sea winds are disappearing, which produces 65% hydroelectricity.

The international coal prices have risen due to the supply and demand imbalance. India which is the world’s second-largest importer of coal, might see a power outage in the coming days due to a deficiency of coal. 

The rise of coal prices will impact the economy of the world as well. India has 135 coal power-plants and currently is running on its coal stocks, but a country that imports coal and produces coal by exporting 223.6 MT around the world.

The pandemic has affected consumer demand due to normalisation post-covid, while the world was opened, the sudden supply chain has been hit due to the disruption by the pandemic. The analyst believes that the world’s move towards greenflation was more sudden than gradual.

The recent restrictions on natural energy and moving towards traditional energy and electric vehicles have disordered the coal prices leading to less investment in coal and natural gas.

China’s move to curb 65% coal and reduce its emissions by 2030 led to the global market falling. Natural gas price has risen in Europe, China has shut down its factories due to the coal crisis. 

Europe is buying Indonesian coal for the first time. The United Kingdom relies on wind energy to source its electric needs. The sudden move towards traditional energy has led to under-investment in natural gas.

Data revealed by Rystad Energy New Investment claims that American and European companies’ oil and gas field development investment has decreased by almost half from 2015 to 2021.

India is amongst the worst-hit countries due to the coal shortage. Delhi, Punjab, and Andhra Pradesh might face an energy crisis. The replenishment of feedstock of coal in 135 coal power plants is a matter of concern.

As domestic production was hit due to rain flooded mining regions and the market post-covid was volatile. The world’s dependence on coal and overnight coal import has led to a crisis.

India’s high electricity demand with state governments free electricity is one more reason for high coal prices because it encourages overuse of energy. 

China’s demand for coal surged after its economy recovered, but its regulation on coal and forcing power production houses to import more pushed towards an energy crisis. 

As the global shift towards renewable energy is climate-friendly, it is expensive for underdeveloped and developing nations. The world is reducing its dependence on coal to meet the climate targets, due to the absence of an economical substitute for coal, the world must find a solution to solve the reliance on coal and rethink its energy policy. 

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