Coal Stages a Sudden Recovery. It Probably Won’t Last.

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Coal has been fading for a decade. But in 2021, it roared back; more was used to generate electricity than in any other year, notes BP’s annual statistical review of world energy.

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This isn’t good for climate change. Coal accounted for 58% of US power-sector carbon emissions in 2021, despite making up just a quarter of fuels used in electricity generation. Globally, coal produced a record 10,244 terawatt-hours of electricity in 2021, says BP, and powered 36% of electricity generation, more than any other source.

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This year could produce another record. Electricity demand is up, so most energy sources are, too. Natural-gas prices recently hit 14-year highs. Gas and coal can substitute for one another in electricity generation; when gas prices rise, plants can switch to coal. Some companies have delayed retiring coal plants over fears of a global power crunch, and supply-chain delays have hit renewable projects. Germany is reinstating 16 dormant fossil-fuel plants—including several coal facilities—to deal with Russia cutting gas flows.

Coal’s rise could last for more than a year, emails Dan Bakal, Ceres’ senior program director of climate and energy: “Yet beyond that, coal’s rebound should be short-lived. It’s important to focus on the fact that new renewable generation is less expensive than existing coal- and gas-fired generation in most instances already, making the climate forecast in the electric power sector brighter in the medium- to long-term.”

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For coal stocks, the boom has been profitable, but it hasn’t attracted many investors. Coal miner Peabody Energy is up 112% in the past year, but is worth just $3 billion. The company is building solar and battery facilities near some of its mining operations.

Next Week

Monday 8/1

Arista Networks,

DaVita,

Devon Energy,
Global Payments, SBA Communications,

Simon Property Group,
and Williams Cos. report earnings.

The Census Bureau reports construction spending statistics for June. Consensus estimate is for a 0.2% monthly rise in total construction outlays, to a seasonally adjusted annual rate of $1.78 trillion.

The Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for July. Economists forecast a 52.2 reading, slightly lower than June’s 53, which was the lowest in two years.

Tuesday 8/2

The Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey. Expectations are for 11.1 million job openings on the last business day for June, 154,000 fewer than in May.

Advanced Micro Devices,

airbnb,

BP,

caterpillar,

cummins,

DuPont,
Eaton, Electronic Arts,

Gilead Sciences,

Marathon Petroleum,

Marriott International,
Occidental Petroleum, PayPal Holdings,

Prudential Financial,
S&P Global, SolarEdge Technologies, Starbucks,
and Uber Technologies announce quarterly results.

Wednesday 8/3

AmerisourceBergen,

Booking Holdings,

Clorox,

CVS Health,

ebay,

Entergy,

Exelon,

fortinet,

Ingersoll Rand,

McKesson,

MetLife,

moderna,

Regeneron Pharmaceuticals,
and Yum! Brands release earnings.

The ISM releases its Services PMI for July. The consensus call is for a 53.3 reading, two points less than in June. The Services PMI has fallen for three consecutive months and is at its lowest level since May of 2020.

Thursday 8/4

Alibaba Group Holding,

amgen,

Becton Dickinson,
Block, Cigna,

ConocoPhillips,

Duke Energy,

Eli Lilly,

Expedia Group,

Fidelity National Information Services,
Intercontinental Exchange, Kellogg, Novo Nordisk,

Paramount Global,

Sempra,

Vertex Pharmaceuticals,

Warner Bros. Discovery,
and Zoetis hold calls to discuss quarterly results.

The Bank of England announces its monetary-policy decision. Traders are pricing in a 50% chance that the central bank will raise its key interest rate by a half-percentage point, to 1.75%.

The Department of Labor reports initial jobless claims for the week ending on July 30. The four-week average for claims is 249,250—the highest level since late last year.

Friday 8/5

Western Digital and
Westinghouse Air Brake Technologies
report earnings.

The Bureau of Labor Statistics releases the jobs report for July. Economists think the economy added 250,000 jobs, after a 372,000 increase in June. The unemployment rate is forecast to remain unchanged near a half-century low of 3.6%.

Write to Avi Salzman at [email protected]

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Credit: www.marketwatch.com /

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