According to the pundits of yesteryear, S&P/ASX 200 Index (ASX: XJO) energy shares focused solely on renewables should be leading the charge by now.
And coal stocks like New Hope Corp Ltd (ASX: NHC) and Whitehaven Coal Ltd (ASX: WHC) should have been relegated to the history books.
The reality, however, is playing out quite differently.
Although significant progress has been made in the transition to solar, wind and hydro power, the truth is that global demand for the reliable baseload power provided by fossil fuels is resilient.
Here's what's happening.
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ASX 200 energy shares lengthy lifeline
The bulk of the booming demand for coal that could unexpectedly see these two ASX 200 energy shares burn brighter over the medium term comes from China, India and Indonesia.
All three countries brought new coal-fired power plants online over the past year. And all three are still constructing more.
That's particularly important because together the three nations have a staggering population of some 3.2 billion people. Or some 123 times the population of Australia.
Indeed, coal consumption in China, which mines and burns half the world's coal, hit a record high in 2022 before soaring 5.6% in 2023 to post another all-time high.
According to the International Energy Agency (IEA), global coal output reached new all-time highs in 2023 as well. And coal continues to provide more than 30% of the world's electricity needs.
This has helped stabilise thermal coal prices at around US$130 per tonne, up from US$116 per tonne in late February this year.
While far below the record levels of US$440 per tonne reached in September 2022, that's still well above the costs New Hope and Whitehaven pay to dig up and ship their coal. And it's higher than any time between 2011 and 2020.
Commenting on the booming demand from Asia that could offer ASX 200 energy shares sustained support, New Hope's CEO Rob Bishop said (courtesy of Bloomberg), "You look at Asia, the demand and the build out of coal-fired power plants, particularly in India – coal's not going anywhere anytime soon."
And like oil and gas, Bishop said coal remains vital in the long-running global transition to low-emissions energy.
"We see that the world needs more operators to mine coal and support the transition over many decades to come," he said.
As for ASX oil and gas stocks
It's a similar story for ASX 200 energy shares drilling for oil and gas, like Woodside Petroleum Ltd (ASX: WDS) and Santos Ltd (ASX: STO).
According to data released by China's National Bureau of Statistics last week (quoted by Bloomberg), Chinese oil consumption increased 9.1% year on year in 2023. And gas consumption was up 7.2%.
