Return of Coal: A Short Visit or a Long Stay?

Despite the existence of global targets to slow the pace of climate change, coal remains one of the most commonly used fuels that accounts for over 25% of the global energy supply and consumption. Multiple factors explain why coal is still widely used: its relatively low prices, availability in developing countries, low transportation costs and path dependence, i.e. the existing energy infrastructure. Coal consumption in developing (non-OECD) countries has been rising thanks to the processes in India and China but in 2021, however, it increased in the OECD countries as well. The uneven and often atypical post-COVID-19 recovery driven by manufacturing created disruptions in energy markets with high and volatile prices of coal’s main substitute - natural gas. The first in history and hence unexpected slowdown in the RES supply in 2021 added to the reversal of trends exactly at the time of the COP26 in Glasgow.
 The goal of our study is to examine the coal markets in the new complex environment determined by both economic and political factors: high commodity prices, rising inflation, decelerating economic growth, and sanctions against exporters. In this paper we analyze the major trends before 2020, the current processes, and their implications for the future in the context of choice between economic development and energy transition including the issue of stranded assets and their possible reopening.