The International Energy Agency’s latest forecast of energy trends for the next 20 years forecasts a significant fall in the share of fossil fuels in the global energy mix.

Nevertheless to meet the world’s energy demands through 2035, the cumulative investment in coal mining amounts to $735 billion, with a further $300 billion needed in transportation infrastructure, mainly railways.

This over $1 trillion investment needed does not include the actual mining operation nor the costs of transporting the coal, which typically account for a large share of the delivered cost of coal.

Investment in coal supply is much less expensive per equivalent unit of output than oil or gas and power-hungry China will be responsible for 40% of the world’s investment in coal mining over the next couple of decades.

The outlook in the US is very different.

New legislation by the US Environmental Protection Agency announced this week virtually impossible to build new coal power plants in the country without carbon capture and sequestration (CSS) technology.

It’s noteworthy that the IEA figures takes into account the widespread adoption of CSS, an expensive and unproven technology, over the time period of its forecast.

A new research note from Capital Economics says the EPA’s new rules designed to curb US emissions of carbon dioxide from the power sector by as much as 30% from 2005 levels by 2030, will reduce the demand for coal and put downward pressure on prices.

In addition, 15% of existing US coal burning capacity is due to be shut down by 2016 under the new rules

Over 90% of US coal is used for electricity generation, so even a small reduction in demand could have a large impact on prices. In addition, 15% of existing US coal burning capacity is due to be shut down by 2016 under the new rules:

"Even before being passed, the EPA’s legislation proposed in September has already effectively prevented new coal fired power plants from being built, as investors are unwilling to back a plant which may not be able to adhere to any new regulations.

"Higher gas prices in the US over the last year have encouraged power plants to burn more coal and less gas, supporting coal prices. These regulations are likely to remove that support, even with higher gas prices, as clean burning gas is seen as the only feasible way to meet the new standards."

From a pre-financial crisis peak of more than $190 a tonne, steam coal fell to $65 late by March 2009. The recovery was swift with prices more than doubling by January 2011 at more than $140.

Since then the international thermal coal prices have been on a steady decline averaging $75 in May. Capital Economics sees the price falling to $60 a tonne by end of next year.