New coal to grow, with a resounding about-face on environmental policies. The new frost on the energy transition and related attempts to saving the planet from the effects of global warming. As India slows down its much-promised race to renewables and returns to the most polluting fuel, two other warning signals act as a disturbing corollary. The modest 2,3% drop in global coal demand by next year, tracked just a year and a half ago by the International Energy Agency (IEA), risks being reversed. Meanwhile, the latest analysis by BloombergNEF (BNEF), the division of Bloomberg that analyses trends in energy technologies and markets, shows that the slow shift in global investments towards green energy is actually going backwards. In a historical phase in which the right-wing parties are fighting with climate denialism there is little to be calm about.
Black mineral seeks new space
The announcement has just come from Shri Prasad, chairman of the state-owned company Coal India, the world's number one coal producer. In an interview with the Financial Times, relaunched in Italy by analysts at e-gazette Prasad announced that more than 30 old mines that had been closed will be reopened and put into full production, with at least five new ones to be added this year alone. justification? Industry, commerce, families, businesses, need energy. And the willing plans for the diffusion of renewable energies are not able to satisfy the growth in demand.
Coal India meets three-quarters of the country's coal demand with 310 mines which still today power three-quarters of the country's electricity generation with little scope to meet the government promises, given as losers, to reduce the share to 55% by 2030 with 500 GW of green energy, and to 27% by 2047. Current investments in renewables of 13 billion dollars seem robust but are far from the 68 billion dollars per year estimated as needed to meet the government's goals.
Paradoxically, the technologies are driving the newfound vitality of the coal giant Coal India. The mines had been closed because uneconomic due to the backwardness of the machinery and the high rate of manual extraction, but the new techniques have evidently given new life to the economic margins. Thus Prasad expects to exceed 1 billion tons of annual production by 2029 compared to just over 780 million last year. A new attempt to reverse could happen - the president of the coal giant justifies himself - only when renewables and battery storage really develop in quantity and efficiency.
The IEA: An Uphill Road
It was December 2023 when the diagnosis arrived. Today the already disheartening forecasts of the International Energy Agency risk being even resized. The IEA report, from a three-year horizon, indicated a comforting 20% decrease in the use of coal by the European Union and the United States over the next two years. The EU has substantially achieved its goal, the United States has come closer, while India and China, on the other hand, are churning out upward estimates of an increase by 2026 of 8% and 5% respectively. And now the latest ones are being added disturbing signs: it will be very difficult to reach the already modest estimate of a 2026% global decrease in the use of coal by the end of 2,3.
So the world of finance is betting on fossils
A deal, perhaps, in the future. But today the distrust between renewable fossil fuels is still struggling to find credibility in the world of finance. So much so that in the portfolio of investment funds, especially in the star-spangled ones, the main oil and gas companies maintain a presence that is not only preponderant but proportionally superior, as a trend, compared to the same development of renewables. Two to one, or even more in favor of fossil fuels: this is the proportion of capital expenditure attributed to the main global investment funds in the latest analysis by BlombergNEF, which introduces the new parameter Energy Supply Fund-Enabled Capex Ratio (Esfr) for estimate the propensity of the funds in investments in green energy compared to those dedicated to the hydrocarbon sector.
To make its estimates, BNEF uses the set of specific investors who have acquired stakes in equity and debt assets linked to energy companies for a value of $204 billion, compared to the estimated $2,3 trillion for capital expenditure on all energy supply activities in 2024. Splitting this package of investments against traditional fossil fuels and renewables generates a global average of the ESFR of 0,48 to 1 with a imbalance even one to ten higher than what would be necessary to support the achievement of carbon neutrality by 2050, jointly promised by all international institutional bodies.
The love of fossil fuel funds in the United States is certainly motivated by the huge investments in fossil fuel techniques. deep crushing of the subsoil to extract oil and gas (tight oil and shale gas) that have allowed America, albeit at the cost of evident environmental damage and growing dangers, to become the world's leading producer of hydrocarbons. With prospects that seemed to show a further development trend but that have recently been scaling down. A sign of hope too weak to really believe it.
