The future of coal investment, trade, and stranded assets

Coal is at a crossroads, with divestment and phase-out in the West countered by the surging growth throughout Asia. Global energy scenarios suggest that coal consumption could halve over the next decade, but the business and geopolitical implications of this profound shift remain underexplored. We investigate coal markets to 2040 using a perfect competition techno-economic model. In a well-below-2 degrees C scenario, Europe, North America, and Australia suf fer from over-capacity, with one-third of today's mines becoming stranded assets. New mines are needed to offset retirements, but a new commodity cycle in the 2030s can be avoided. Coal prices decline as only the most competitive mines survive, and trade volumes fall to give more insular national markets. Regions stand to gain or lose tens of billions of dollars per year from reducing import bills or export revenues. Understanding and preparing for these changes could ease the transition away from coal following 150 years of dominance.

Automated summary

Coal is at a crossroads, with declining consumption in the West and surging growth in Asia. Understanding and preparing for the shift could help ease the transition away from coal following years of dominance. The market is projected to see over-capacity in some regions and a decline in trade volumes as national markets become more insular.