We Still Need Coal

Despite Western Attempts to Eradicate it. Updated 8/29/24

coal mine RR car loading chute, northern Utah - saw several coal mines and coal power plants on my 10 day road trip

This is an update on a post from last December. I’ve made a few changes, added a few new statistics and links, and created an audio version. Notice in the subtitle the attempts to get rid of coal is a trend in the West - but in the East, we see China and India needing and using more coal than ever. from Forbes: “In 2023, China approved 114 gigawatts of coal power capacity, up 10% from a year earlier, according to research published by Reuters. The trend noted last year was a troubling one as it marked the fourth annual increase in a row of fresh coal capacity approvals in China.”

fast forward to 2024 - global energy monitor - the approvals for new coal power plants in China are finally slowing down - however - “In the first half of 2024, construction began on over 41 GW of coal projects, nearly equaling the total that started construction during all of 2022 and constituting more than 90% of global new coal construction activities.”

see also a related article, by Duggan Flanakin 10/31/24

Also, Africa needs cheap energy like coal to continue to develop and rise from poverty. ..from dw.com “Like South Africa — where around 90% of energy comes from coal — other African countries have embarked on mining this raw material. Botswana, Tanzania, and Mozambique are among the leading countries.”

I can understand the movement to convert power plants from coal to natural gas, since nat gas has lower CO2 emissions, but according to the US Energy Information Administration coal was still an important energy source for U.S. electricity generation in 2023—about 9%.

Nearly all coal-fired power plants use steam turbines. A few coal-fired power plants convert coal to a gas for use in a gas turbine to generate electricity.”

It would be a huge mistake to phase out coal too quickly, at a time when more and more of our electricity is produced intermittently and unpredictably by wind and solar, and a time when demand is escalating due data centers and government stimulus of all things electric, especially electric vehicles. One of the great advantages of coal is that it is so reliable, 24/7, regardless of weather conditions. No coal plants should be shut down unless there is another, reliable source of energy to take up the slack, like nat gas or nuclear; not unreliable, weather-related sources like wind and solar.

Some people will die in the cold or heat if the power grid goes down for more than a couple days. Grid size battery backups for solar and wind are woefully inadequate and horribly expensive. The ‘energy transition’ needs to slow down or the unintended consequences will be catastrophic.

Are the climate change extremists deliberately trying to kill people? Possibly. At least some of them think one of the solutions to their dreaded climate change is to reduce the world population. Our present administration is following Germany’s lead, trying to completely get rid of coal, as quickly as possible, regardless of how many people will be right on the edge of freezing*, and regardless of how many people will be hurt by rapidly rising electric bills. The poor are the ones who will be hurt the most. *see my post “How to Prepare for Lengthy Blackouts” if you missed it.

China and India, on the other hand, are wise enough to have been building more coal plants, to reliably provide more electric power to meet increasing demand.

meanwhile, the insane policies continue

Stu Turley’s News Beat Dec.2 “US Commits to Shutting Down Coal Plants…”

“Last month President Biden said that coal plants “all across America” will be shut down, to be replaced with wind and solar. A move to close down coal plants in the U.S. is already underway as federal clean energy tax credits and regulations make it harder for operators to compete economically. A report by the nonpartisan Institute for Energy Economics and Finance Analysis found that 173 coal plants are set to close by 2030 and another 54 by 2040.”

From Stu Turley’s Energy News Beat Dec11 “Major Grid Operator Warns…”

“A major power grid operator that oversees electricity supplies across the mid-Atlantic repeated its warning that the looming shutdown of a coal-fired power plant in Baltimore will threaten the region’s grid reliability and may have devastating impacts on consumers…

The coal plant shutdown is required because of a previous agreement between the plant operator company and the Sierra Club

The president of the federally designated regional grid operator charged with maintaining grid reliability wrote to the Sierra Club. Here’s an excerpt; kudos to Stu Turley for passing this along…

“This situation requires immediate attention,” … “Failure to come to resolution on this issue could result in degraded grid reliability for over 1,000,000 Maryland consumers during peak hours, including the entirety of the city of Baltimore, for the years between the stated deactivation of Brandon Shores and the date whereby needed transmission can be constructed.”

FINANCE

Since coal is hated, it may actually be a good time to consider investing in it. I’m no investment advisor, but I’ll tell you what I think, for what it’s worth. Coal mine companies will be around much longer than most investors think. Coal has been bad-mouthed ignorantly and unfairly. We will still need it for at least a couple decades, and a lot of folks are going to be surprised. The major producers have low debt and good cash flow. Arch Coal (ARCH), for example, as of 8/26/24, at about $123/share has a P/E (price per earnings ratio) of 11, a free cash flow of 25/sh, and pays a 5.16% dividend. Another coal company to look at is Consol Energy (CEIX). At $93/share, P/E is 7.5, and free cash flow is 20, although they’re not paying a dividend.

Whenever you see a P/E near 10, or below, either something is wrong, like the company is in trouble, or if it’s a solid company with good earnings that’s going to be around 10 years from now, you’re looking at a good buy - which is what I’m suspecting. Coal isn’t glamorous, but I think it’s a solid investment, (no pun intended) and at today’s prices, probably a lot safer than other stocks that have zoomed up so far that they’re teetering on a precipice.

FAITH

“For every animal of the forest is Mine,
The cattle on a thousand hills.
I know every bird of the mountains,
And everything that moves in the field is Mine.” Psalm 50:10-11

and as the hymn says, God owns the wealth in every mine - even coal mines - and I don’t think He wants us to waste it.

When I was a boy, we had a coal bin in the cellar. The coal truck would come and dump the coal down a metal chute that the driver would stick through the little cellar window opening. The noise of the coal roaring down that chute was a memory I’ll never forget. I stood in the cellar and watched our coal bin fill up. There was a mechanical ‘thermostat’ in the living room upstairs that connected to the damper on the door of the coal furnace by a lightweight chain that went down through the floor, so we could notch the chain up to open the damper if we wanted a hotter fire, or vice versa. Dad would get up about 4 or 5 AM and go down in the cellar and shake the furnace grate with a built in lever; that would shake the “clinkers” from the grate so they would drop down into the ash take-out area. Then he would get a fire started and add coal once it got going good. Coal puts out about twice as much heat energy as wood. Our furnace was very important, because it often got down to 20 below zero (F) in our winters.