Russia’s Coal Industry Faces a Crisis Amid Global Shift to Renewables
As the world pivots towards renewable energy and advanced storage technologies, Russia’s coal industry, once a cornerstone of its economy, is on the brink of collapse. With thermal coal prices plummeting by nearly 80% from their peak in 2022, over half of Russia’s coal producers are now operating at a loss. This downturn coincides with a global surge in renewable energy investments, positioning clean energy as the future’s dominant force.
Data from the Financial Times highlights the severity of the situation, reporting losses of Rbs 225 billion (approximately US$2.8 billion) in the first seven months of 2025 alone. This figure is more than double the losses recorded in 2024. As a result, 23 coal companies have ceased operations, and another 53 are at risk of closing.
“The coal industry is going through its sharpest crisis since the 1990s”
President Vladimir Putin has acknowledged the challenges, stating that “coal producers are having a tough time.” The root cause is simple: logistics costs now account for 50 to 90 percent of the coal’s final price, and discounts to Asian markets are significant, forcing some producers to export at a loss to maintain foreign currency flow and protect jobs.
The Shift from Scarcity to Technology
Just a few years ago, fossil fuel producers celebrated record profits as geopolitical tensions sent oil and coal prices soaring. However, the situation has changed dramatically. According to the World Bank, coal prices are projected to decline by approximately 27% in 2025 and again in 2026. This marks the end of an era of scarcity and the beginning of an era emphasizing technology and efficiency.
Subsidies Falling Short
Despite a government relief package of 178 billion rubles (around US$2.2 billion), the coal industry is in free-fall, with anticipated losses potentially reaching 300 to 500 billion rubles this year. More than half of Russian coal companies are unprofitable, a situation exacerbated by logistical challenges and diminishing global demand.
“At current prices, exchange rates, financing costs and logistics, thermal-coal production in Kuzbass is unprofitable across the board.”
Even with government intervention, the structural issues within the industry are too significant to overcome without substantial shifts in market dynamics or geopolitical landscapes.
Global and Domestic Coal Challenges
Globally, the coal industry is facing similar challenges. In the United States, a federal coal lease auction in Montana attracted minimal interest, with just one bid of $186,000 for 167 million tons of coal. This reflects a 99.9% drop in value compared to a similar auction in 2012.
“It tells you that there’s no competition for that coal in the ground, and it’s not worth very much money. It points to the fundamental, structural decline the coal industry is facing — and that story hasn’t been reversed.”
Renewables on the Rise
For the first time, renewable energy sources have generated more electricity than coal globally. According to Ember’s Global Electricity Mid-Year Insights 2025, renewables supplied 34.3% of global electricity in the first half of 2025, surpassing coal’s 33.1% share.
This shift is not just a result of policy but a reflection of actual consumption patterns. Alongside renewables, nuclear energy is gaining traction as a stable low-carbon energy source, with countries like France, the U.S., and China investing in small modular reactors.
The Role of Batteries
California’s focus on developing “mega-batteries” has significantly enhanced grid capacity, tripling since 2020. This development underscores the importance of storage technologies in managing peak demand and integrating renewable energy sources effectively.
Batteries are revolutionizing electricity storage much like silos did for grain, ensuring reliability amid increasing renewable energy production. Forecasts suggest battery storage volumes could increase by two-thirds in 2025 and continue to grow substantially by 2030.
Economic Implications
The transition from fossil fuels to renewable energy is driven by economic factors rather than moral considerations. As costs for solar, wind, and battery storage have plummeted, investing in climate action has become the growth story of the 21st century.
Lord Nicholas Stern of the London School of Economics emphasizes the critical nature of this shift:
“Investment in climate action is the growth story of the 21st century. High-carbon growth is futile because it ends in self-destruction.”
The Political Dimension
Despite the clear economic advantages of transitioning to renewables, political challenges remain. In the U.S., there have been moves to shut down critical CO₂-monitoring satellites, while in Europe, some political parties are reconsidering their commitments to net-zero targets.
These actions could delay the transition, increasing costs for consumers and impacting global competitiveness.
The Urgency of Transition
Global fossil-fuel subsidies still exceed US$7 trillion annually, distorting markets and delaying the shift to cleaner technologies. The longer the transition is postponed, the greater the risk of economic and environmental collapse.
Russia’s coal crisis, coupled with the global decline in coal demand, signifies the need for urgent action. The shift towards renewable energy is not just a possibility but a necessity to ensure sustainable economic growth and environmental protection in the future.
Original Story at www.forbes.com