Smoke without fire

The market for US financial coal swaps may be starting to show a little potential, but some major obstacles still remain before it catches alight – not least a widely accepted price index. By Joe Marsh

Despite rising US coal prices and increasing global pressure to reduce emissions, coal still remains the fuel of choice in the US. But the product has long lacked a financial trading market to match that of other energy commodities. Now a derivatives market is finally showing signs of life, albeit weak ones.

Estimates say coal-fired generation accounts for 55% of total power generation, which stood at just over 1 million megawatts overall in 2003, according to US government figures