Japan's nuclear disaster sent global equity markets into what appeared to be a short-lived state of confusion yesterday, in the end benefiting nearly every energy source except for nuclear power.

Stock prices for U.S. coal giants surged throughout the day. Peabody Energy, the world's largest publicly traded coal producer, ended the day with a gain of about 4 percent to $67.67. Earlier in the day, the company's shares climbed toward $70.

The nation's second-largest producer, Arch Coal, gained about 1.5 percent on the New York Stock Exchange to end the day at $34.15 a share. The Dow Jones U.S. Coal Index gained 1.6 percent, a retreat from higher prices earlier in the day.

Peabody and Arch, each based in St. Louis, are building business models on the expectation that they can vastly increase their exports to Asia. With big holdings in the Powder River Basin region of Wyoming and Montana, both companies are looking to ship American coal out of proposed West Coast terminals. But those projects face stiff opposition at the local level and from environmental groups concerned that shipping coal to Asia simply shifts greenhouse gas emissions to emerging economies and exacerbates China's dependence on coal.

Opponents of one planned West Coast export terminal, in Longview, Wash., celebrated a decision yesterday by its chief sponsor, Australia-based Ambre Energy, to scrap the original permit application and start over. The project came under heavy fire in recent months after reports showed company officials were planning an 80-million-ton-a-year coal export terminal instead of the 5-million-ton project they had proposed.

Arch, a minority shareholder in Millennium Bulk Logistics, the company created to build the port, did not issue a public statement explaining the decision on the terminal.

Equity analysts at Jefferies & Co. said in a research note yesterday that coal is positioned to benefit from nuclear power's disaster. Japan is highly dependent on energy imports, including oil, coal and liquefied natural gas. It's the largest LNG importer in the world, and is Asia's largest importer of coal for the production of electricity. Coal and gas generate about 55 percent of Japan's power.

Coal looks to benefit from disaster

Peabody, in particular, is expanding production and coal trading out of Australia, Indonesia and China. Japan could end up picking up more of Peabody's coal shipments, as more coal-fired baseload generation is needed to replace nuclear power plants taken offline after the recent earthquake and tsunami wiped out several reactors.

"We believe the Japanese earthquake should lead to increased demand for metallurgical and thermal coals," says the report from a team led by Jefferies' chief coal analyst, Michael Dudas. "Coal producers appear to have an ability to benefit from expected shifts in primary energy generation in Japan, increased infrastructure rebuild, and potentially higher delivered [energy] pricing," it says.

Japan is the largest importer of steel-making coal in the world, according to the analysts, at times absorbing 30 percent of globally traded metallurgical, or coking, coal. Japan imports the bulk of its coal out of Australia.

Steel plants along the coast of Tokyo Bay took a significant hit. In the short term, that could dampen demand for coal to produce steel. China, India and Brazil will fill that gap. "In the medium-long run," said the analysts, "steel demand in Japan could rise on after-quake reconstruction demand. That could lead to even higher demand for [steel-making] coal prices in the medium-long term."

"We would expect Japanese utilities will focus on importing alternative sources of energy, namely coal, LNG and oil," said the Jefferies' analysts.

Still, they said, that depends on how badly Japan's ports are damaged.

Natural gas, renewables also surge

FBR Capital also weighed in, saying that coal stocks will weather a political storm in the United States about U.S. EPA's proposal for regulating hazardous air pollutants from power plants. The rule requires the use of "maximum achievable control technology," or MACT. Utilities are already steering away from building new coal-fired generation because of the emerging EPA air quality rules being developed under the agency's Clean Air Act authority.

"Relatively little flexibility would help drive retirements of coal-fired generation and push incremental demand for natural gas, renewable and nuclear," said FBR analysts. Coal producers "could see pressure" in light of the MACT proposal, but are "currently riding the nuclear renaissance reconsideration debate."

"We are firm believers in the global export market for U.S. producers and expect companies to push for increased exports," said FBR.

Shares for natural gas producer Chesapeake Energy also gained more than 3 percent in trading to finish yesterday at $34.65 a share. Southwestern Energy, another significant unconventional U.S. gas company, saw its ticker climb about 3 percent.

Cheniere Energy, which has proposed building LNG export capacity into its import terminal in southern Louisiana, climbed 2.4 percent to $8.46 a share. Cheniere is also targeting a European and Asian markets that could end up using more gas to replace coal and, perhaps, to replace older nuclear power plants.

Natural gas commodity futures prices climbed past $4 per million British thermal units yesterday.

Solar industry stocks climbed earlier this week, and analysts attributed much of that to the Japan disaster. Renewable energy companies would be part of the alternative that Japan, possibly Germany and others would look to if they decommissioned nuclear plants.

First Solar, a major U.S. thin-film solar producer, lost 2.4 percent yesterday to close at $155 a share after surging at the start of the week.