The Underdog Investment G7 Members Won’t Tell You About When Coal Dies

We all want perfection in everything we do. 

Everyone strives for it, and anything less would be unacceptable. Unfortunately, more often than not the problem with this way of thinking tends to ignore the reality of a situation.

A couple of days ago, we talked about the G7 hammering the final nail in the coal industry’s coffin by announcing its plan to phase out existing unabated coal power generation in our energy systems by 2035. 

As I pointed out last time, accelerating that timeline to phase out coal by the first half of the 2030’s is practically useless here in the United States. Not only have we stopped building coal plants altogether, but the coal capacity we DO HAVE is so old that most of our capacity will be retired in the next ten to fifteen years anyway!

Maybe if they put it down on paper now, perhaps the G7 can take credit for it later. 

If you’re like me, then you know that this leads to a natural follow-up…

It’s a simple question of: What comes next?

In a perfect world, the world would immediately transition from coal to renewable energy. 

Instead of burning dirty carbon that took hundreds of millions of years to form under immense heat and pressure, we would be harnessing the power of the sun and wind to supply an endless amount of energy to the world. 

But hey, maybe in this perfect world cars are fueled with rainbows, buildings are heated and cooled through wishful thinking, and electricity is generated by good intentions. 

Sure, it would be nice if we transition to renewables overnight — but it would ignore the reality of the situation. The hard truth is that it’s going to take decades for this transition to happen. 

More importantly, there’ll be some bumps along the way.

For the last 20 years, U.S. wind power has been growing by leaps and bounds. 

That’s a GOOD thing. 

And yet according to the EIA, our electricity from wind turbines declined for the first time since the mid-1990s despite the addition of 6.2 GWs of new wind capacity we added in 2023:

What was the problem? Well, last year the wind simply didn’t blow as much. Slower wind speeds caused electricity generation from our wind turbines to decline by 14% during the first six months of 2023. 

I say this not because the wind industry is about to collapse, simply that it’s going to take time. 

Our growth in wind power generation has tripled to 147 GW over the last thirteen years, and it would be wild to think the U.S. could sustain that kind of growth going forward. 

Of course, we’re only talking about the United States. 

It turns out that the G7’s pledge to phase out coal for good really was nothing more than a virtue signal. Like all good climate pledges, exceptions will be made for those that can’t keep up. 

By the way, I’m not even talking about China or India, both of which demand massive amounts of coal to power their countries. 

I’m referring to G7 members themselves! In this case, exceptions will be given to Japan and Germany. I have a feeling that the only way the G7 group could even get a consensus together was if those exceptions were in place. 

That brings us to a more realistic solution.

The problem isn’t finding the right bridge to that renewable-powered future the world wants to see — we already have that in place!

If only there was a massive source of baseload power we could find in the United States that burns cleaner than coal and can be brought to scale… hmm.

The two energy sources that should immediately jump to mind are natural gas and nuclear power. 

What’s interesting to individual investors like us is that the natural gas sector has been brutally beaten for more than a decade. It’s simply a case of oversupply — one that may change in the coming years. 

You see, there’s more to this oversupply issue than the massive amount of natural gas being extracted in plays like the Marcellus, where companies are pumping 36.1 billion cubic feet of it out of the ground every single day. 

The issue is that U.S. oil production in areas like the Permian Basin have been surging higher the entire time, which has boosted the amount of associated gas production. Since 2014, natural gas production in the Permian Basin has more than quadrupled to 25.2 billion cubic feet per day. 

Even though we are consuming more natural gas than ever before in the United States, that supply/demand imbalance has absolutely cratered prices; we’ve gotten to the point that the largest natural gas producers are cutting production. 

Ah, but there’s a bit of a catch to this story. 

Now that U.S. oil production is expected to remain relatively flat this year, have we finally reached a turning point for natural gas? 

We’ll soon find out.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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