MW There are few assets hated like coal - why this dirty fuel may have a future

By Barbara Kollmeyer

Cheap coal stocks are just one lure for the unpopular investment

Coal may have more of a future than many expect.

If asked to name one of the most hated investments, there's a good chance "coal" might pop up.

Coal's popularity as an investment has been going down the chute since the early 2000s, but energy consulting firm group Wood Mackenzie recently laid out a trajectory that coal demand could stay strong through 2030, and demand-demise predictions have been often been wrong.

"While the long-term trajectory toward renewables remains intact, the path is proving far more complex than many anticipated as countries grapple with energy security and affordability concerns," wrote Anthony Knutson, global head, thermal coal markets at Wood Mackenzie.

Also read: Why cheaper power looks unlikely as Trump's big budget law reshuffles the U.S. energy landscape

Tim Rotolo is chief executive officer of Range Fund Holdings, which runs a dedicated coal exchange-traded fund-the Range Global Coal Index ETF COAL. The $20 million fund launched in early 2024, as the worldview was "shifting toward greater emphasis on electricity generation for energy security and reliability," he told MarketWatch in a Wednesday interview.

It was also inspired by a renewed focus on energy reliability and security, with Russia's invasion of Ukraine and energy-prices spike giving a message that "in a crisis, the reliability and access to electricity and energy at a reasonable price is the sole objective, not climate change and not lowering the temperature of the globe."

The fund's top holdings are Yancoal Australia (AU:YAL), Warrior Met Coal $(HCC)$ and Alliance Resource Partners (ARLP).

The ETF, down 21% since inception, is also a play into interest in electricity-demand growth, said Rotolo. "Coal fits very nicely into an out-of-consensus view. And importantly there was no coal ETF, and so in the same way that we want to find contrarian ideas from a fundamental stock perspective, we also want to find areas of limited competition in the ETF space from a distribution perspective."

Range Fund also runs a dedicated nuclear ETF, Range Nuclear Renaissance Index ETF NUKZ that launched at the same time and has gained 75% since inception.

The coal fund is split evenly between metallurgical coal exposure, used in steel production, and thermal, burned for electricity or heat. One stock, Peabody Energy (BTU) slumped to under $1 per share in the fourth quarter of 2021 from $45 and is back up to $17. He said the environmental, social, and governance $(ESG)$ movement has made it hard for coal companies to get debt financing and insurance, and their cost of access to capital soared.

"They didn't really have any options except to buy back stock or retire debt because they couldn't really invest in new projects, or do anything," Rotolo said, adding that "in certain instances, that's a good time to be buying this stock because, you know, everybody tends to run away from them at that moment, but they are very cheap."

Investors shunning coal has turned into a bet on whether the industry would go out of business, and he believes "the consensus is just consistently wrong, and that just presents opportunities."

Rotolo said peak coal supply matters more than demand. "If demand is kind of stable, but supply is collapsing, well, all of a sudden the price of coal may go through the roof. And so those coal stocks are going to make a lot of money," he said.

"It may shrink as a portion of the overall generation capacity, but actual demand for coal has continued to grow, because the pie is growing," with China and India big drivers of demand.

Wood Mackenzie's Knutson told MarketWatch in an interview that coal is a cheaper option for countries, given the up-to-five-year wait for gas turbines. Countries such as India with its massive population and electricity-demand needs can't get there with just renewables, he said.

Energy security concerns, surging energy demand and technology advances all work to extend coal's usage, he said. "Asia's young coal fleet is evolving to work in concert with significant renewable growth," he added.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are climbing, as investors shrug off fresh tariffs from President Trump, while Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y are inching up, and gold (GC00) is climbing.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6345.06    -0.28%  1.31%   7.88%   22.03% 
   Nasdaq Composite                                                     21,169.42  0.19%   2.71%   9.62%   30.71% 
   10-year Treasury                                                     4.252      -12.30  -9.90   -32.40  25.50 
   Gold                                                                 3440.9     3.40%   3.56%   30.37%  42.00% 
   Oil                                                                  64.74      -7.91%  -5.20%  -9.92%  -14.19% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Weekly jobless claims are due at 8:30 a.m., along with second-quarter U.S. productivity and unit-labor costs. Wholesale inventories are coming at 10 a.m., followed by consumer credit later at 3 p.m.

Eli Lilly $(LLY)$ shares tumbled, and those of rival Novo Nordisk (DK:NOVO.B) rose, after the Indianapolis drugmaker said its key Orforglipron drug in a late stage trial didn't lower weight as much as investors had expected.

DoorDash stock $(DASH)$ is up after the online food-delivery group reported forecast-beating results and a new quarterly record for orders.

Airbnb stock $(ABNB)$ is also down after the vacation platform said summer demand picked up, but warned of lower profits ahead.

Stock of drive-through beverage chain Dutch Bros (BROS) climbed after posting higher profit and sales.

A technical issue caused delays for hundreds of United Airlines $(UAL)$ flights late Wednesday.

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Top tickers

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   PLUS    EPlus 

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-Barbara Kollmeyer

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August 07, 2025 06:57 ET (10:57 GMT)

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