Small word choices mean a lot in climate-change agreements. At the COP26 meeting, the phrase most countries wanted was a deal to “phase out” coal. What they got, after interventions by China and India, was a “phase down” of coal.
Investors are less mixed about coal’s future. Shares of U.S. producer Peabody Energy fell 8% on Monday, while Arch Resources stock was off 6.6%. The VanEck Vectors Coal exchange-traded fund closed in December, returning $35 million in assets to shareholders. At its height, the ETF had more than $900 million in assets.
Still, the coal deal is a landmark, and more than 20 countries agreed to stop building or permitting coal plants. But if India and China don’t reduce coal use, it will be tough to limit global warming to 1.5 degrees Celsius. The Climate Action Tracker consortium found that COP26 pledges would produce twice the greenhouse-gas emissions by 2030 needed to meet the goal. “There’s a nearly one-degree gap between government current policies and their net-zero goals,” says Bill Hare, CEO of consortium member Climate Analytics.
The problem: European and Asian countries are competing for natural gas and relying on coal and gas to get them through winter. Countries “aim to prioritize supply security over environmental goals, at least through the medium term,” writes Prakash Sharma, Wood Mackenzie’s Asia-Pacific head of markets and transitions. To hit the goal, coal’s share in power generation needs to fall to less than 5% by 2050, from 35% in 2020, Wood Mackenzie estimates.
Getting there will depend on how fast the world builds solar, wind, and battery capacity, and whether technologies like carbon capture can mitigate coal’s effect.
Next Week
Monday 11/22
Agilent Technologies , Keysight Technologies , and Zoom Video Communications release quarterly results.
The National Association of Realtors reports existing-home sales for October. The consensus estimate is for a seasonally adjusted annual rate of 6.19 million homes sold, 100,000 fewer than in September. Existing-home sales hit their post-financial-crisis peak at 6.73 million last October and have fallen for much of this year, partly due to supply constraints, especially at the lower-price end of the housing market.
Tuesday 11/23
Analog Devices , Autodesk , Best Buy , Burlington Stores , Dell Technologies , Dick’s Sporting Goods , Dollar Tree , Gap, HP Inc., J.M. Smucker , Jacobs Engineering Group , Medtronic , and VMware report earnings.
IHS Markit releases both the Manufacturing and Services Purchasing Managers’ indexes for November. Expectations are for a 59.5 reading for the Manufacturing PMI and 59 for the Services PMI. Both figures are slightly more than the October data. Both indexes are off their peaks from earlier this year, but higher than their levels from a year ago.
Wednesday 11/24
The BEA reports its second estimate of third-quarter gross domestic product. Economists forecast a 2.2% annualized rate of growth, higher than the BEA’s preliminary estimate of 2% from late October.
Deere reports fiscal fourth-quarter 2021 results.
The Federal Open Market Committee releases minutes from its early-November monetary-policy meeting.
The Census Bureau releases the durable-goods report for October. Economists forecast a 0.2% month-over-month increase in new orders for manufactured durable goods, to $262 billion. Excluding transportation, new orders are seen rising 0.5%, matching the September gain.
The BEA reports personal income and spending for October. The consensus call is for a 0.4% monthly increase in income after a 1% decline in September. Personal spending is expected to rise 1%, month over month, a faster clip than September’s 0.6% gain.
Thursday 11/25
U.S. bourses and fixed-income markets are closed in observance of Thanksgiving.
Friday 11/26
It’s Black Friday, one of the busiest shopping days of the year and the traditional kickoff to the holiday shopping season. The National Retail Federation estimates that a record $851 billion will be spent by U.S. consumers this November and December, a 9.5% increase from last year. U.S. exchanges have a shortened trading session on the day after Thanksgiving. The Nasdaq and New York Stock Exchange end trading at 1 p.m., and the bond market closes at 2 p.m.
Write to Avi Salzman at [email protected]
