For more detialed information and expert knowledge on the worldwide energy & coal market, please refer to Dr. Lars Schernikau’s book  „Economics of the International Coal Trade. The Renaissance of Steam Coal“, Springer 2010. The 2nd edition of this book titled  „Economics of the International Coal Trade – Why Coal Continues to Power the World“, is currently about to be published by Springer and will be available early 2017.

Recent articles by Dr. Schernikau related to the energy & coal market can be found in our Media section. 

 

Energy is the foundation of our highly developed society. Its availability allows us to organize our public life and to pursue scientific activities and industrial development.
It is hard to imagine our life without energy. Though energy is invisible and is usually taken for granted, its production and supply have to be carefully planned and secured with great organizational effort.

Where does energy come from?
The world primary energy1 mix consists mainly of oil, coal, gas, nuclear, and renewable energy.


World Primary Energy Mix (2014 in %)


1a_world-primary-energy-mix-2014-in Source: VDKi – Verein der Kohlenimporteure 2016

Due to its flexibility, oil, accounting for 33% of primary energy, is still the most important primary energy source. However, it is also the most expensive one. Furthermore, political risks related to oil supply and the oil peak² expected by 2020, illustrate its limited capacity. Oil is especially important for the production of fuels for transportation vehicles. With a contribution of 4% to global electricity generation, oil is of lesser importance in this area.

The high importance of gas for primary energy (24% share) comes from its reliability and relative cleanliness as a fuel for electricity generation. However, gas is also very much influenced by developments in international politics and is highly monopolized. The production and transportation of gas require long-term and costly investments.
In the last years, the role of unconventional gas has become increasingly important. Especially in the US, the production of Shale Gas led to an expansion in the gas supply and therefore prices (Henry Hub spot price) were pushed down. The continuous increase of traded LNG (liquefied natural gas) makes it possible to separate supply and demand centers, thus enabling the development of an international gas market.

Coal is currently experiencing its renaissance. Coal is perceived by many as a sign of backwardness and something that belongs in the last century. Few are aware that coal contributes significantly to the global energy mix, covering almost a third of global primary energy consumption and over 40% of electricity production. Coal is cheap, readily available and, thanks to balanced distribution over all continents, free from political pressure. The application of new and advanced technologies improves the efficiency of coal power plants and minimizes its impact on the environment.

Nuclear energy – with 4% of the global primary energy mix and 11% of electricity generation – is a significant contribution to global energy needs. It is clean and relatively efficient. However, it comes with a series of unresolved issues, such as nuclear accidents and contamination risks, influence of radiation, final storage or danger of terrorist attacks.

Renewable energy is a necessary addition to fossil fuels and is steadily increasing its contribution to the energy mix. However, green energy sources cannot yet be perceived as a reliable source of energy. Even the growth of global energy consumption alone cannot be fully covered by renewable energies. We hope that this situation can be changed soon. Therefore, we need a technological breakthrough to be able to rely on renewables on a large scale.


World Energy Mix – Scenario 2100


1b_world-energy-mix-scenario-2100

Source: World Coal Institute, www.wci-coal.org

Energy is necessary for our daily existence. Its availability at affordable prices and, more importantly, its 100% accessibility have to be guaranteed. As the lion’s share of energy resources is finite, we need to use them economically and efficiently. At the same time, we have to strive to organize our energy generation in an environmentally friendly way. Therefore, we need more research to foster technological advancement to increase efficiency and to design our energy mix in a sustainable way.


Primary energy¹ is natural, unprocessed energy, which goes as input to the energy system. Examples of primary energy are coal, gas, crude oil and solar energy. In contrast, secondary energy has been transformed into more convenient and user-friendly forms of energy such as electricity or refined fuels.

Oil Peak² is a theory which predicts the end of the oil age. Due to its finiteness, oil production is expected to reach its peak and then decrease. At the same time, consumption of energy resources is supposed to steadily increase.