The Indian trading house Adani Resources Ltd. has just reached an agreement with the Queensland government on royalty payments for the Carmichael coal mine, which the company is considering building in northeastern Australia. As one of the largest thermal coal mines in the world, it would exert a country-sized impact on global carbon emissions during its 60-year life. As the company decides whether to go ahead, it will need to keep in mind three relevant energy trends.
First, Australian coal remains cheaper than natural gas – but not hugely so. Since 2011, coal has been as high as $5.38 per million British thermal units and gas as high as $13.96/MMBtu. However, since 2014, gas has fallen below coal’s peak prices. Thanks to U.S. exports, the world may soon be flooded with natural gas, and that means gas prices aren’t likely to be spiking upward.