Coal-reliant ports in for a struggle
Ports reliant on coal shipments will face price declines, greater competition and restructuring as fossil fuel demand declines, warns a new report.
Carbon Tracker’s ‘2020 Vision: Why You Should See Peak Fossil Fuels Coming’ says that fossil fuel demand will peak in the 2020s with demand for coal, gas and oil now stalling because the cost of renewables and battery storage is falling fast.
This is due to emerging economies which are pursuing clean energy, and governmental policy is being driven by the need to slash emissions, control climate change and reduce air pollution.
"In a world where coal usage is falling, there will be less need to transport coal," said report author Kingsmill Bond. "So the current infrastructure will no longer be needed in its entirety."
According to the report, affected sectors will struggle to make the transition and companies in those sectors, including coal-reliant ports, "can expect price declines, greater competition, restructuring, stranded assets and market derating."
The report points to the challenge for ports with the largest capacity coal terminals, which include Tianjin and Qinhuangdao in China, Newcastle, Gladstone and Hay Point in Australia, Krishnapatnam in India and Richards Bay in South Africa.
The fossil fuel sector has invested an estimated US$25 trillion in infrastructure and there will be systemic risk to financial markets as they seek to digest vast amounts of stranded assets, said the report, warning that China and India are already choosing solar and wind over fossil fuels.
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