How does coal affect our economy?

2 Answers
Apr 17, 2016

Coal was "king" since the beginning of the industrial revolution around 1750, but its importance has declined significantly in the last decade.


Coal has been used for over 200 years to power developed world societies and this allowed their economies to grow so much. Coal is used to generate electricity, produce cement and steel.

However, the environmental and climate change impacts of coal in North America and Europe have been recognized by governments and most are now phasing the use of coal out. Cheap and plentiful natural gas is replacing coal and has it less environmental impact. Renewables are also replacing coal in many countries.

In the developing world, India and China in particular, coal is still used and more coal-fired power plants continue to be built. Cheap coal helps these countries improve their economic output (GDP), but they pay a terrible price related to the environment and public health. In environemtnal economics, this is considered to be a market failure as the total economic impact of burning coal (poor health, poor air quality) is not reflected in the pricing of coal. China has begun the process of moving away from coal, to some extent, and is building more renewable energy projects.

Apr 18, 2016

Coal is a major factor in energy production. Therefore its availability, costs and alternatives affect a very basic factor in all economies.


Energy is the main ‘fuel’ for social and economic development, and energy-related activities have significant environmental impacts.
How this impacts the economy is explored further in this article:
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By Con-struct - BP Statistical Review of World Energy 2015, CC BY-SA 3.0,
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All energy is “non-renewable” because the law of thermodynamics says that entropy is always increasing, and energy cannot be created or destroyed – only changed in form.

However, in terms of available energy sources on earth we think of any directly solar-derived sources as “renewable”. Included are wave,water, wind, biomass conversion and direct photo-voltaic electrical production. Nuclear power is produced from a fixed supply of raw material that cannot be “renewed”.

While nuclear power production may be considered “cleaner” - at least with respect to greenhouse gas generation – than “fossil fuels” (hydrocarbons), it still requires the use of a limited mineral resource. The uranium ores necessary for nuclear fuel production only exist in finite amounts in the earth, and they are not renewable, although they may have very long lifetimes.

Even fusion power will consume net physical resources, even though the output is much more, and cleaner environmentally overall than fission-produced power.