Prospects for steam coal exporters in the era of climate policies: a case study of Colombia
Lebenswissenschaftliche Fakultät
Continued global action on climate change has major consequences for fossil fuel
markets, especially for coal as the most carbon-intensive fuel. This article
summarizes current market developments in the most important coal-producing
and coal-consuming countries, resulting in a critical qualitative assessment of
prospects for future coal exports. Colombia, as the world’s fourth largest
exporter, is strongly affected by these global trends, with more than 90% of its
production being exported. Market analysis finds Colombia in a strong
competitive position, owing to its low production costs and high coal quality.
Nevertheless, market trends and enhanced climate policies suggest a gloomy
outlook for future exports. Increasing competition on the Atlantic as well as
Pacific market will keep coal prices low and continue pressure on mining
companies. Increasing numbers of filed bankruptcies and lay-offs might be just
the beginning of a carbon bubble devaluing fossil fuel investments and leaving
them stranded. Colombia largely supplies European and Mediterranean
consumers but also delivers some quantities to the US Gulf Coast, and to Central
and South America. Future coal demand in most of these countries will continue
to decline in the next decades. Newly constructed power plants in emerging
economies (India, China) are unlikely to compensate for this downturn owing to
increasing domestic supply and decreasing demand. Therefore, maintaining or
even increasing mining volumes in Colombia should be re-evaluated, taking into
account new economic realities as well as local externalities. Ignoring these risks
could lead to additional stranded investments, aggravating the local resource
curse and hampering sustainable economic development.
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