Melvin: Dirty Fuel Has a Bright Future

Editor's Note: This article was originally published at 3 p.m. EDT on Real Money on Aug. 20. Sign up for a free trial of Real Money.

I find it mildly amusing to talk about energy stocks with investors who only pay attention to the headlines. Most people seem to think that we are the verge of a tremendous green energy future and that in virtually no time at all we will be getting the bulk of our power needs from wind , solar and other renewable sources. Of course, they also think that renewable means cheaper and that is far from the case at this moment in time.

I am a big believer in renewable energy technologies but that cheap green future is still a long way off. It may the norm for my kids at some point, but for the foreseeable future we will need to burn stuff to meet global energy needs.

The consensus view is that we will see the demise of the coal industry sometime soon as well. While coal is considered a dirty fuel, it is also necessary for much of the world. Far from declining, coal demand is projected to grow over the next decade as emerging markets burn the coal that the U.S. may stop using.

Even the U.S. will still use a significant amount of coal to produce electricity for several decades. As International Energy Agency Executive Director Maria van der Hoeven recently pointed out: "Like it or not, coal is here to stay for a long time to come. Coal is abundant and geopolitically secure, and coal-fired plants are easily integrated into existing power systems. With advantages like these, it is easy to see why coal demand continues to grow."

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