US banking giant Citigroup says the global coal-fired power sector is facing a persistently bleak future, with only the prospect of progress in carbon capture and storage likely to arrest decline.

The value of listed coal companies monitored by Citi has shrunk from $50bn (£32bn) in 2012 to $18bn in 2015, a trend it believes will continue.
“On the demand side we think thermal coal is cyclically and structurally challenged and that current market conditions are likely to persist,” it says in a report released on Tuesday.

Although development in clean coal technology has accelerated, carbon capture and storage has not developed to a credible extent.

Citi says the coal industry response to declining demand is “best described as optimistic and hopeful” that its fortunes will change and that new clean coal technology will be developed.

“If progress is not made quickly with CCS, it is difficult to see it playing a major role in emissions reductions.”

Coal demand in Asia remains strong, but Citi predicts Indian imports will slow by 2019 and highlights South Korea’s pledge to reduce coal’s share of the energy mix by 10 per cent in 2029.

“Its ultimate survival may perversely come down to government intervention, which given the current political backdrop regarding CO2 emissions doesn’t appear likely,” it adds.

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