Coal provides about 40% of the world’s electricity and 29% of world energy but is under severe pressure due to widespread concern about environmental emissions, substitution by lower- priced natural gas and growing electricity production by renewables. The reduced global demand is also linked to China – the world’s largest producer and consumer of coal – as the country rebalances to a more service-based economy. Global coal consumption increased from 4,600 million tonnes in 2000 to 7,876 million tonnes in 2013. It was the fastest-growing primary energy source. But in 2014 and 2015, demand dropped by a total of about 4% – the first consecutive year drop since 1982. China remained by far the world’s largest coal consumer, producer and importer, accounting for about 50% of global consumption. Chinese demand is sputtering, however, as the economy gradually shifts and curtails coal power generation. New Chinese hydro, nuclear, wind and solar power generation is driven not only by energy security and climate concerns, but also by efforts to reduce local pollution. In the past three years, more than 200 million tonnes of coal production has been shut down in China. In December 2015, Beijing said it would not approve any new coal mines over the next three years; 60 million tonnes of unneeded capacity is being shuttered in 2016. US coal production also fell in 2015 to 900 million short tons, according to data from the Energy Information Administration – a 10% decline on the previous year. The US situation is more dire: Peabody Energy, the largest coal-mining company in the U.S. has filed for Chapter 11 bankruptcy protection. The only company in the Dow Jones U.S. Coal Index not in bankruptcy is Consol Energy. One by one, most of the nation’s senior publicly-held coal mining companies have filed for bankruptcy, something rarely seen in America: the sudden and sharp collapse of a functioning industry. US coal companies have been hit hard in their homeland by competition from low-cost shale gas, together with the introduction of tougher environmental regulations. According to a report by the US Energy Information Administration, 2016 will be the first year that natural gas overtakes coal as the largest energy source in the US. Many US coal companies are overburdened by debt, which has hastened their demise, as well as a fierce drive to produce more tonnage, when less production is required to rebalance the domestic market. A recent McKinsey and Company report cited US production over capacity at about 20% and called for a smaller domestic industry. However, the industry faces decades of financial challenges, as it has an inability to pay off accumulated indebtedness and other liabilities. While global coal growth demand is expected to continue in the medium term, albeit by a modest annual 0.8%, most of the growth will be centred in India and southern Asia. Rebalancing of supply-demand in China and the US is likely to continue. （Written by Peter Jones, Executive Vice President, Century Global Commodities Corporation）