Posted on 06/28/2022 9:29:16 PM PDT by SeekAndFind
It’s not something I ever thought I would see…
The use of coal as a way to generate electricity is on the rise. Given the politics around clean energy, it comes as a surprise to see the increasing use of coal – the dirtiest form of carbon-based fuel – to produce electricity.
Last week was a bit of a shocker as Germany announced that it would pass laws to reopen previously closed coal-based power plants for the purpose of electricity production.
It appears that there have been some unintended consequences from the European Union’s stance on Russia. Last week, Russia cut capacity on the main gas export pipeline to Germany by 60%.
With the economic sanctions from the E.U. and U.S. on Russia, which oddly enough largely excluded energy, China and India used the geopolitical turmoil to increase their purchases of both oil and gas.
China’s imports of oil from Russia increased 28% in May compared to the previous month. And India went from almost nothing to purchasing more than 750,000 barrels a day.
Apparently, there are other willing buyers of Russia’s energy than just the E.U.…
The problem centers around Germany’s energy policy, which makes it entirely dependent upon the supply of Russia’s natural gas. It had shut down all but three of its nuclear power plants, which are still scheduled to be taken offline before the end of this year.
Where does that leave Germany? It’s turning to coal… and lots of it. Other European countries that were importing Russian natural gas and oil are also scrambling now.
While the northern hemisphere may be enjoying its first post-pandemic summer, governments are in panic mode.
The summer solstice has already passed, and while most of us may not have noticed yet, the days are already getting shorter. And that means that fall and colder weather are not that far off, hence the race to reopen those coal-based power plants.
Making matters worse, the current heat wave in Europe is drawing down natural gas reserves in order to power air conditioning. This will make it even harder to replenish natural gas storage going into winter. It is a terrible situation that could become even worse in the event of a colder-than-normal winter.
And it’s not just a handful of European countries getting “dirtier.” It’s the U.S. as well.
It may come as a surprise to know that electricity production from coal, which had been on a decline since 2013 in the U.S., has spiked… but for different reasons than Germany.
Energy production from the dirtiest carbon-based fossil fuel increased last year in the U.S., in order to offset the corresponding drop in U.S. domestic natural gas production. Basically, the U.S. reduced the use of a far cleaner energy like natural gas and replaced that production with coal. And this is a trend that has continued into this year.
For additional perspective:
In 2013, coal represented 40% of the source of electricity production in the U.S. The steepest declines in the use of coal happened between 2017 and 2020. Coal, as a source of electricity, dropped all the way down to 20% and was planned to drop dramatically lower.
In 2021, coal as a source of electricity production jumped to more than 23%… almost a quarter of all energy production. We don’t yet have numbers for 2022, but they are likely to be even higher. I expect coal will jump to 25% of all electricity produced by the end of this year.
For those of us who like clean energy, this is not the right direction. And while terrible for the environment, it is somewhat of a renaissance for the coal industry.
Peabody Energy (BTU), the leading coal producer (and one that has been around since the 1880s), makes for an easy representation of what has happened in the industry in the last year and a half.
The company’s share price collapsed an incredible 98% from 2018 until November of 2020. But since then, Peabody’s share price rocketed as high as 3,815%. It has pulled back a bit, but it is still up more than 2,700% since those lows.
It’s an incredible story.
Peabody’s revenues were down 37% year over year in 2020. The company had negative gross margins, was grossly unprofitable, and had a negative $201 million in free cash flow.
This year, Peabody revenues will be up by 73% compared to 2020, it will have EBITDA margins of 44%, be very profitable, and have an extraordinary $1.4 billion in free cash flow.
What an odd beneficiary of what was supposed to be a clean energy policy.
It’s my understanding that many advances have been made since the old days of coal burning, so let’s not get excited about something that is probably not nearly as bad as it sounds. Sure sounds a LOT better than freezing to death in the winter or burning up in the summer. Of course the liberals would probably prefer suffering to coal burning & I wish there were some way to set it up so they alone could.
LOL you can’t make this CRAP (powered by wind and solar) up:-)
Biden still hasn’t of finding out the secret code of plans start at the beginning then go to end result.
Meanwhile...
EXCLUSIVE India's top cement maker paying for Russian coal in Chinese yuan
“And daddy won’t you take me back to Muhlenberg County
Down by the Green River where Paradise lay
Well, I’m sorry my son, but you’re too late in asking
Mister Peabody’s coal train has hauled it away”
I was given my Friends of Coal sticker in Muhlenberg county
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