According to the International Energy Agency, stemming from the conflict in Iran, the world is now facing the largest energy crisis in history. As the global scramble for energy intensifies, the pivot to coal in parts of Europe and Asia has become a sprint. Soaring LNG prices, disrupted supply chains and growing pressure to keep electricity affordable are pushing countries toward the abundance, reliability and irreplaceable energy security offered by coal. And coal isn’t just proving to be the key global answer to spiking power prices, it’s also emerging as a critical alternative for gas, chemical and liquid fuel production. Coal’s importance during this global crisis is once again reaffirming its staying power.
Coal steps up as LNG prices surge
As the global natural gas market faces its second crisis in just four years, today’s pivot to coal may well prove to be more than a near-term band-aid—it may be a more structural change. Reducing exposure to the volatility of LNG supply has become an urgent task for nations stretching from South Korea and Japan to India and the Philippines. Even Italy has announced a plan to postpone its planned phaseout of coal capacity by 13 years.
While the global LNG market has grown steadily over the past decade, that momentum has quite literally slammed into a chokepoint. Even if LNG supplies once again begin to flow freely through the Strait of Hormuz, Qatar – the world’s second largest LNG exporter – says that getting its LNG export capacity back to pre-war levels may take as long as five years. This conflict, and its impact on global markets, is going to reverberate for years to come.
Not just electricity
Coal is likely to see not only a years-long bounce in the electricity marketplace, but also a major swing toward coal gasification as increased production of syngas, chemicals and fertilizer is underway. Both India and China, the world’s leading coal consumers, are doubling down on burgeoning gasification industries.
To meet soaring power needs, India is already expecting unprecedented coal demand this year and has now announced a National Coal Gasification Mission, aiming to produce 100 million metric tons of gasification output by 2030. Today, India is dependent on imports for 50 percent of natural gas supply and over 90 percent of methanol and fertilizers. Coal gasification offers an increasingly essential alternative.
China has been trailblazing a path forward with its enormous coal gasification and coal-to-chemicals and liquid fuels sector. Even before this crisis, the International Energy Agency observed that China was consuming 380 million metric tons of coal annually as a feedstock for chemical and liquid fuel production. That level is equivalent to all U.S. consumption.
China, which already consumes nearly 40 percent more coal than the rest of the world combined, has stated its aim to double coal gasification and coal-to-chemicals production by 2030—a target only strengthened by today’s energy crisis. China’s reliance on coal is proving an energy security leg up. It’s an advantage that hasn’t gone unnoticed.
Meeting global demand
The International Energy Agency has repeatedly revised its projections for peak global coal demand over the past decade with demand in 2025 in fact reaching a new high. Today’s global energy crisis and pivot to coal is likely to send global demand even higher. The world needs more coal, and it needs reliable, nimble suppliers to meet it.
U.S. exporters are ready and capable of stepping up to the plate. U.S. producers have historically served as swing suppliers to global coal markets and came to the rescue when the world desperately needed U.S. energy following Russia’s invasion of Ukraine. With U.S. coal exports already reaching 70 different nations, U.S. coal will be essential to filling the gaps in global supply and once again meeting the needs of allies and trusted trade partners.