The price of oil may be much lower than the recent high of around $80, but the current level of $55 is still much higher than it was a few years ago. The fluctuating price results in the rebalancing of energy portfolios.
Energy can be obtained from a variety of products, and these products can sometimes be used as substitutes. Unfortunately, logistic and technical processes very often require a specific energy form and quality.
Coal, for instance, is gaining popularity because of its relatively low price. But remember that coal is not always coal. Just as oil is not always oil; throughout the world oil is to be found in different grades: sweet oil or sour oil, as well as heavy or light crudes.
It is the same with coal. Half of the world's coal reserves consist of low-ranked coal, such as brown and sub-bituminous coal. But the market for high quality coal has become tight and tense. China & Japan, in particular, are massive net-importers of high-grade coal.
A process has been developed to upgrade coal. Brown coal can be upgraded to the same heat value as bituminous coal. This technology may boost various countries' export, particularly Indonesia's as their reserves are mainly low graded. The country may profit from this technology, but the upgrading process involved will raise the costs and therefore the price.
Luckily, Indonesian coal is known for its low-sulphur and low-ash content, which makes it more environmentally friendly. The future of our environment is of utmost importance and we must become more environmentally aware.
Coal is polluting the air we breathe. Burning coal produces CO2-gasses. CO2 gas is considered a main greenhouse gas (GHG) and causes severe changes in our climate. This is why I truly believe that coal should not be our goal.
Many countries signed the Kyoto protocol which supports the intention of countries to lower the emissions of greenhouse gasses.
Unfortunately, not all countries are backing the Kyoto protocol. However, if the Democrats win the US elections next year, the US will join other Kyoto members.
Will this lower the price of coal?