What is Coal Crisis and It’s Global Impacts

In the past few days, one of the modern-day crises has been flashing on the world media, i.e power crisis or the coal crisis. Coal happens to be the commonly available fossil fuel resource, which acts as a backbone in the electricity supply globally. In addition, Coal also pays a major contribution towards the production of steel, concrete, and paper. Mr. Sachin Gupta, Associated trainer with ISFM – Best Stock Market School have collected some important point that every have to know.

The worldwide crisis was recognized in the past month, where some countries like the UK witnessed the cold season in summer, which pushed the demand for gases and as a result, UK switched on its old power plants. Consequently, the demand for coal soared very rapidly. The basic rule of economics played its trump card and the prices of coal skyrocketed at their 13-year higher level in Europe.

Big Shot witnessed a larger Impact: The world’s major producers like China and India have recorded larger impact of the crisis. The fun fact is both countries are the leading consumer and importers globally.

• China has recently decided to ban its import of coal from Australia to reply to the Australian Governments demanded inquiry on the evolvement of COVID-19 from China as well as its shift from thermal energy to renewable energy in order to match their climate goal.
• When it comes to India, during 2019-20, approximately 73% of Coal used by the country was their own, and the remaining ~27% was imported. The crisis in the country was mainly due to the following:
• The lockdown in the past year led by the global pandemic, which resulted in a reduction of power demand. After the withdrawal of lockdown in 2021, the economy is reviving and witnessed a rise in power demand.
• There is a low supply of coal as compared to demand due to reduced import by India, owing to higher coal prices globally.
• Lower production of coal, caused by the extended monsoon season, resulted in flooding and waterlogging in many coal mines.
• The Central government also stated that some state governments has not maintained ample stock levels before the onset of the monsoon.

Impact of Coal Shortage:

• As of result of the shortage of electricity to the industries, the economic reopening could be hampered.
• Some of the businesses may downscale their production.

Future Steps:

• The coal companies are working consistently to raise output from mines and GOI (Government of India) is also trying to strengthen the supply by bringing more mines into operation.
• Citizens of the country are required to gradually shift them to renewable energy from thermal energy in order to battle against the limited resources.
• As per the latest interview by the management of Coal India Limited, the current scenario is likely to end in the later days of October 2021.

Companies to be Benefited from the Circumstances:

The Rising demand for electricity has charged up the power sector of India and as a result, Indian Energy Exchange, Tata Power, and Torrent Power have gained in the past week’s trading session on the Indian Securities market.