‘Coal is dead’ and oil faces ‘peak demand,’ says world’s largest investment group

BlackRock investment group, with $5 trillion in assets, is bullish on electric cars and renewables.

U.S. coal production is at lowest level since 1978. CREDIT: EIA
U.S. coal production is at lowest level since 1978. CREDIT: EIA

“Coal is dead,” Jim Barry, the global head of BlackRock’s infrastructure investment group, explained in a recent interview.

BlackRock, the world’s largest investment group, with $5 trillion in assets — more than the world’s largest banks — has begun to bet on clean energy. Why? “The thing that has changed fundamentally the whole picture is that renewables have gotten so cheap,” said Barry.

No, the world’s coal plants are not going to all down shut tomorrow, Barry noted to The Australian Financial Review (subscription required). “But anyone who’s looking to take beyond a 10-year view on coal is gambling very significantly.”

President Donald Trump famously campaigned on restoring coal jobs, and has continued to reiterate that commitment as president, but the economic reality makes that a futile effort.

The U.S. alone has shuttered 40 gigawatts of coal plants since 2000.

“These [coal plants] will not reopen whatever anything President Trump does,” as Bloomberg New Energy Finance recently explained, “nor do we see much appetite among investors for ploughing money into U.S. coal extraction — stranded asset risk will trump rhetoric.”

The economic reality is that cheap fracked gas and plummeting prices for clean energy has squeezed both coal production and coal consumption to levels not seen for decades.

U.S. coal production (blue) and consumption (green). CREDIT: EIA
U.S. coal production (blue) and consumption (green). CREDIT: EIA

While the coal industry had hoped exports would pick up the slack, that dream has been thwarted by China’s accelerated shift away from coal-driven economic growth to clean energy, coupled with India’s new push to follow suit.

Coal isn’t the only fossil fuel at risk. Because of the rapidly improving performance and cost of batteries, Barry is “bullish” on electric vehicles. And as a result, he is bearish on oil demand, noting that “there was always this historic view on oil about peak supply but it’s about peak demand being an equal dynamic.” BNEF and the credit rating agency Fitch have made similar warnings.

In short, the smart money is headed away from fossil fuels and toward clean energy.