Bringing problems in bulk

In contradiction to this we see the coal fired power stations coming under increasing environmental pressure, including new legislation, driven by the growing use of shale gas.

In 2011, demand for coal accounted for almost a third of total global energy consumption, now the second-most important source of energy behind oil. By 2014, coal consumption is projected to account for more than 50% of global demand, according to the IEA. China has become the largest user of coal with India being projected to surpass the US as a coal user by 2017.

There is however a significant risk that the economic slowdown in China will impact infrastructure and development plans that were based on coal generating electricity, particularly in response to environmental pressures following the very high levels of pollution experienced in 2013 in China.

Coal demand among OECD countries fell to levels last experienced in 2000. Europe is caught in a bind with nuclear power stations under scrutiny and in part due to the shale gas revolution in the US, which has made US coal unattractive domestically causing greater exports. As a result, Europe is increasing the use of coal for power generation, at least in the short term. In the US the retirement of coal-fired power plants due to environmental regulation will continue to reduce coal consumption.

This sets the stage for the dry bulk transport of coal with repercussions for LNG as well. It is likely that transport demand will peak by 2020 which will subsequently create a new era in the supply/demand situation for the shipping sector.

The danger exists that there will be too much capacity not only in the coal shipping sector but also in the LNG market as offshore natural gas sources are displaced by local sourcing due to the shale gas being found in huge quantities in north America, Europe and Asia.