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A freight train transports coal from the Gunnedah Coal Handling and Prepararation Plant, operated by Whitehaven Coal Ltd., in Gunnedah, New South Wales, Australia, on Tuesday, Oct. 13, 2020.
David Gray | Bloomberg | Getty Images

LONDON — Soaring electricity demand, infrastructure woes and a surge in global gas prices have triggered an extraordinary rally for the world’s least liked commodity.

Australian thermal coal at Newcastle Port, the benchmark for the vast Asian market, has climbed 106% this year to more than $166 per metric ton, according to the latest weekly assessment by commodity price provider Argus.

The Newcastle weekly index, which stood at a 2020 low of $46.18 in early September, now appears to be closing in on an all-time high of $195.20 from July 2008. Its South African equivalent, the Richards Bay index, ended the week through to Aug. 13 at $137.06 per metric ton, up more than 55% this year.

To put thermal coal’s remarkable rally into some context, international benchmark Brent crude is one of few assets to have recorded comparable gains this year. The oil contract is up 33% year-to-date.

The resurgence of thermal coal, which is burned to generate electricity, raises serious questions about the so-called “energy transition.” To be sure, coal is the most carbon-intensive fossil fuel in terms of emissions and therefore the most important target for replacement in the pivot to renewable alternatives.

Yet, as policymakers and business leaders repeatedly tout their commitment to the demands of the deepening climate emergency, many still rely on fossil fuels to keep pace with rising power demand.

It comes shortly after the world’s leading climate scientists delivered their starkest warning yet about the speed and scale of the climate crisis. The Intergovernmental Panel on Climate Change’s landmark report, published Aug. 9, warned a key temperature limit of 1.5 degrees Celsius could be broken in just over a decade without immediate, rapid and large-scale reductions in greenhouse gas emissions.

U.N. Secretary-General, António Guterres, described the report’s findings as a “code red for humanity,” adding that it “must sound a death knell for coal and fossil fuels before they destroy our planet.”

Earlier this year, Guterres pushed for all governments, private companies and local authorities to “end the deadly addiction to coal” by scrapping all future global projects. The move to phase out coal from the electricity sector was “the single most important step” to align with the 1.5-degree goal of the Paris Agreement, he said.

Outlook for thermal coal prices

Yulia Buchneva, director in natural resources at Fitch Ratings, told CNBC that thermal coal remains a key global energy source, noting the commodity still has a more than 35% share in global power generation.

“We expect that the share of coal in energy generation will decline driven by the energy transition agenda, however this will have a rather longer-term impact on the market. In the medium-term demand for coal in emerging markets with less strict environmental agenda, in particular in India, Pakistan, and Vietnam, where coal-fired power dominates generation, is expected to rise,” Buchneva said.

By comparison, Buchneva said that since the U.S. and EU account for only 10% of worldwide demand for coal, an expected contraction in these regions would have a limited impact on the global market.

When asked whether thermal coal prices could push even higher in the coming months, Buchneva replied: “The current high thermal coal prices have decoupled from costs and are therefore not sustainable. We expect that prices will normalize during the remainder of the year.”

Fitch Ratings assumes the price of high energy Australia coal will decline toward $81.

A bucket-wheel reclaimer stands next to a pile of coal at the Port of Newcastle in Newcastle, New South Wales, Australia, on Monday, Oct. 12, 2020.
David Gray | Bloomberg | Getty Images

Energy analysts cited a variety of reasons for thermal coal’s breakneck rally. These included rebounding power demand in China, Beijing’s informal ban on coal imports from Australia, supply disruptions in Australia, South Africa and Colombia, and rising global gas prices.

For the latter, analysts at Argus said Europe had incurred unseasonably low gas storages, weak liquified natural gas imports and modest pipeline imports from Russia. It has coincided with gas prices rising more sharply than coal and thus led to an increased incentive to burn coal at the expense of gas for power generation.

“Coal as an expensive substitute, especially in Europe given the need to buy pollution offsets via emission futures, is likely to continue into the winter period,” Ole Hansen, head of commodities research at Saxo Bank, told CNBC via email.

“This in response to low gas stock levels both in the US and Europe following a high demand season driven by extreme heat and economic activity,” he continued. “All in all, coal is in demand despite raised focus on climate change.”

Hansen said this was simply due to the lack of supplies from coal’s biggest competitor: natural gas.

Financing coal projects to become more difficult

“I’m reluctant to get into how this is going to continue to play out over the next few months. I think things are fairly fluid in terms of the impact of the virus on various economies and it doesn’t take much of a slowdown for things to really start impacting a commodity like coal,” Seth Feaster, energy data analyst at IEEFA, a non-profit organization, told CNBC via telephone.

“One thing I can say is that prices have been very volatile. And from a U.S. perspective, when coal companies talk about exports being their savior, we find that pretty suspect because volatility makes it very difficult for coal companies to have any kind of long-term plan around thermal coal exports.”

Smoke and steam rises from the Bayswater coal-powered thermal power station located near the central New South Wales town of Muswellbrook, New South Wales, in Australia.
David Gray | Getty Images News | Getty Images

Feaster said that while some countries appeared hesitant to move away from coal, it is becoming “abundantly clear” that financing for coal projects is drying up. “It is going to be very difficult going forward to fund any kind of new power projects for coal,” he continued.

“I think that that’s really going to become a pariah around the world for anybody to finance coal projects. It is going to become more expensive and more difficult.”

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More Cybertruck delays, GM and Hyundai break records, and a new electric classic

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July 2, 2024

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More Cybertruck delays, GM and Hyundai break records, and a new electric classic

On today’s episode of Quick Charge, Tesla is delaying Cybertruck deliveries, 3rd time’s a charm for FSD transfers, EV sales are up all over, big trucks go far, and a classic electric Porsche.

We’ve got lots of Tesla news to get through today – some good, some bad, but all very much “on brand” for the electric carmaker we’ve come to know in recent years. Meanwhile, GM, Hyundai, and Kia and setting EV sales records, America’s big truck companies break ground on a new battery factory, Volvo clocks 50,000,0000 miles on its electric semis, and a classic electric Porsche 911.

Prefer listening to your podcasts? Audio-only versions of Quick Charge are now available on Apple Podcasts, Spotify, TuneIn, and our RSS feed for Overcast and other podcast players.

New episodes of Quick Charge are recorded Monday through Thursday (that’s the plan, anyway). We’ll be posting bonus audio content there as well, so be sure to follow and subscribe so you don’t miss a minute of Electrek’s high-voltage daily news!

Got news? Let us know!
Drop us a line at tips@electrek.co. You can also rate us on Apple Podcasts and Spotify, or recommend us in Overcast to help more people discover the show!

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China is building a mammoth 8 GW solar farm

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July 2, 2024

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China is building a mammoth 8 GW solar farm

China 8 GW solar farm
https://unsplash.com/photos/solar-panels-on-green-field-513dBrMJ_5w

State-owned power company China Three Gorges Renewables Group will build an 8 GW solar farm as part of a nearly $11 billion integrated energy project.

To put the sheer size of the 8 GW solar farm in perspective, the three largest solar farms in the world by capacity are China’s Ningxia Tenggeli and Golmud Wutumeiren solar farms, with a capacity of 3 MW each, and a 3.5-GW solar farm outside Urumqi, Xinjiang’s capital. 

In addition to the massive solar farm, the $10.99 billion project will also consist of 4 GW of wind, 5 GWh of energy storage capacity, 200 MW of solar thermal, and (disappointingly) 4 GW of coal-fired power. It will be sited in Ordos, in northern China’s Inner Mongolia region, the Shanghai-listed company said in a stock filing.

China Three Gorges says that the enormous integrated energy site’s power will be dispatched to the Beijing-Tianjin-Hebei cluster in northern China via an ultra-high voltage power transmission line.

The project will break ground in September and is expected to come online by June 2027.

China Three Gorges Renewables will take a 56% stake, and Inner Mongolia Energy Group will control 44%.

Read more: In a world first, China installs an 18 MW offshore wind turbine

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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –affiliate link*

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Hispano Suiza will do a hill climb and show off its new 1,114 hp Carmen Sagrera at Goodwood

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July 2, 2024

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Hispano Suiza will do a hill climb and show off its new 1,114 hp Carmen Sagrera at Goodwood

Boutique electric hypercar developer Hispano Suiza announced it would return to the Goodwood Festival of Speed this month to showcase two of its latest vehicles. One on display will be its newest model, the Carmen Sagrera, which packs four motors that combine for 1,114 horsepower.

Hispano Suiza is a boutique automaker in Spain with well over a century of experience. Founded in 1904, the brand established a prominent reputation by producing luxury cars, aircraft engines, trucks, and weapons throughout the early to mid-1900s.

The brand has been revived in recent years with a keen focus on all-electric hypercars that deliver one-of-a-kind performance. Hispano Suiza’s venture into bespoke BEVs began in 2019 with the debut of the Carmen – a truly unique model of which only 24 examples were assembled, and no two are exactly alike.

As an encore, Hispano Suiza launched the even more exclusive Carmen Boulogne. Only five were built, and one was delivered to a customer in the US in 2023. It currently sits as one of the most expensive BEVs on the planet.

To complete the trifecta, Hispano Suiza teased a third hypercar called the Carmen Sagrera this past February as a driveable nod to its 120-year history in automotive design.

We only caught a glimpse of its massive spoiler at the time but got the full picture in June when the Spanish automaker officially debuted it to the public in Barcelona. Later this month, Hispano Suiza intends to debut the Carmen Sagrera in the UK for the first time during the annual Goodwood Festival of speed.

It is there that it also intends to do a famous hill climb in another one of its all-electric hypercars.

Hispano Suiza to compete (and show off) at Goodwood

According to news from Hispano Suiza today, it will return to the Goodwood Festival of Speed and bring along not one but two all-electric hypercars. The first will be the previously mentioned Carmen Sagrera, which will be presented to the media and authorities in the UK for the first time, including The Duke of Richmond, who founded the annual Goodwood event.

The new all-electric hypercar, piloted by former Formula 1 driver Luis Pérez-Sala, will pull out onto the stage of Hispano Suiza’s dedicated stand. The public will be able to see it up close and take advantage of a pre-sale of Hispano Suiza’s new Capsule Collection of branded merchandise.

Those hoping to see the Carmen Sagrera in action as Goodwood may be disappointed, as it will only be on display. However, the automaker shared that it intends to do a hill climb with Carmen Boulogne, which is a nice consolation.

This year’s Goodwood Festival of Speed will occur July 11-14. If you’re there, be sure to check out the new Carmen Sagrera in person and report back.

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