European governments are drawing up plans to phase out coal, U.S. coal-fired power plants are being shuttered as prices of clean energy plummet, and new Asian projects are being scrapped as lenders back away from the dirtiest fossil fuel.
And Russia? President Vladimir Putin’s government is spending more than $10 billion on railroad upgrades that will help boost exports of the commodity. Authorities will use prisoners to help speed the work, reviving a reviled Soviet-era tradition.
The project to modernize and expand railroads that run to Russia’s Far Eastern ports is part of a broader push to make the nation among the last standing in fossil fuel exports as other countries switch to greener alternatives. The government is betting that coal consumption will continue to rise in big Asian markets like China even as it dries up elsewhere.
“It's realistic to expect Asian demand for imported coal to increase if conditions are right,'' said Evgeniy Bragin, Deputy Chief Executive Officer at UMMC Holding, which owns a coal company in western Siberia’s Kuzbass region. “We need to keep developing and expanding the rail infrastructure so that we have the opportunity to export coal.’’
The latest 720 billion ruble ($9.8 billion) project to expand Russia’s two longest railroads — the Tsarist-era Trans-Siberian and Soviet Baikal-Amur Mainline that link western Russia with the Pacific Ocean— will aim to boost cargo capacity for coal and other goods to 182 million tons a year by 2024. Capacity already more than doubled to 144 million tons under a 520 billion ruble modernization plan that began in 2013. Putin urged faster progress on the next leg at a meeting with coal miners in March.
“Russia is trying to monetize its coal reserves fast enough that coal will contribute to GDP rather than being stuck in the ground,” said Madina Khrustaleva, an analyst who specializes in the region for TS Lombard in London.
Putin is betting that his country’s land border with China and good relations with President Xi Jinping make it a natural candidate to dominate exports to the nation that consumes more than half of the world’s coal. His case is helped by the fact that Australia, currently the number one coal exporter, is facing trade restrictions from China amid a diplomatic dispute over the origins of the coronavirus.