S&P/ASX 200 Index (ASX: XJO) coal stocks are trailing the benchmark today.
Rival ASX 200 coal stock Whitehaven Coal Ltd (ASX: WHC) is faring a bit better, with shares down 0.5% at $7.22 apiece.
For some context, the ASX 200 is up 0.9% at this same time.
While it's unlikely we can point the finger directly at the latest climate pledges out of the United States for this underperformance today, the US did just up the ante in the global move to switch off coal-powered electricity.
Here's what happening.
ASX 200 coal stocks eyeing Cop28 developments
As you're likely aware, the 28th United Nations climate change conference, or Cop28, is currently underway in Dubai. With coal widely derided as a dirty fuel, ASX 200 coal stocks will be watching this year's developments closely.
Among those developments, US special envoy John Kerry just upped his nation's commitment to phasing out coal-fired power plants in an effort to mitigate global warming.
According to Kerry (quoted by Metro):
We will be working to accelerate unabated coal phase-out across the world, building stronger economies and more resilient communities. The first step is to stop making the problem worse: stop building new unabated coal power plants.
This sees the US join 56 other countries that have pledged to end their reliance on coal to keep the lights on and the air conditioners running.
The US currently produces about 20% of its electricity from coal-fired plants. A figure that's been falling steadily over the past few years. It's unclear when the remaining plants will come offline.
What else should investors keep in mind?
Looking at the medium-term outlook for ASX 200 coal stocks, there is a range of other factors to keep in mind atop their own potential exploration, mining and deal-making achievements.
First, Kerry is talking about thermal coal here. That's generally a lower quality coal mainly used to power electricity plants. Coking (or metallurgical) coal – mainly used for steelmaking – will likely remain in demand for significantly longer before suitable, economical substitutes come into broader use.
Second, while the US and many other nations are charging ahead to end their dependence on coal-fired power, not everyone is equally eager. China and India, the world's two most populous nations, are among those still building new coal-fired plants.
China appears particularly intent on ensuring its citizens have reliable power regardless of the carbon footprint.
According to a report from Center for Research on Energy and Clean Air (CREA) earlier this year:
Coal power plant permitting, construction starts and new project announcements accelerated dramatically in China in 2022, with new permits reaching the highest level since 2015. The coal power capacity starting construction in China was six times as large as that in all of the rest of the world combined.
That may not be what a world looking to reduce carbon emissions wants to hear.
But it indicates ASX 200 coal shares should continue to see plenty of demand for their high-quality coal – thermal and coking – for some time to come.