Carbon Constraints Cast a Shadow over the Future of the Coal Industry
Standard and Poor’s Rating Services, McGaw Hill Finance, July 21 2014
Despite being the most polluting source of power generation, accounting for 41% of global carbon emissions, coal remains a cornerstone of the global economy, delivering 30% of energy and 40% of power generation worldwide. Recent announcements on carbon regulation in the U.S., attempts to curb pollution in China, and negotiations in the European Union over the 2030 framework for climate and energy policies in October are likely to slow the pace of coal demand. As governments globally seek to reduce their CO2 emissions, it looks increasingly likely that “King Coal” will lose its crown. This report finds that a significant decline in coal production and consumption globally is becoming a much more realistic concept. However, the pace and scale of change within the coal industry is far from clear, and investors could potentially remain in the dark for some time.