EURACOAL report shows EU coal market suffering impact of squeeze

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The European coal production market has registered a fall in the first six months of the year according to the Euracoal agency’s half-year report.

The market stood at around 338.6 Million tonnes in the first six months of the year, slightly lower than the 348 Million tonnes in the same period last year.

Mike Bostan, Public Affairs Manager at Euracoal told Power Engineering International what prompted that decline.

“The coal industry in EuEuracoalrope is pushed on three sides: worldwide low coal prices, due to overproduction; low electricity prices due to subsidised renewables; and regulatory pressure to modernise, a task made difficult due to limited public and private financing for the sector.”

What this means for the industry in the medium and long term isn’t necessarily clear yet, and Bostan believes the UN conference in Paris in December will tell a lot.

“The energy market is changing all of the time. For example coal prices were very high in 2008 and 09 and are now low. What this means for the future is difficult to see. Everyone has their eyes on what will happen regarding the forthcoming UN COP21 negotiations in Paris. That may drive a different avenue for coal in the future. We should be able to gauge more after Paris. Another determining factor for coal in Europe is the price of freight. For now the cost of freight is low and we monitor that to see where it is going. A report we have produced covering a period of 18 months has seen a decline compared to the same period the previous year.”

While the report is of chief interest in terms of coal production and coal imports and not overly concerned with coal-fired power generation, some power plants data is included in terms of how it feeds into the market as a whole.

Euracoal’s data provides detail from each member state showing the various factors involved impacting on the coal market.

In Germany for the first two quarters of this year the three remaining hard coal mines produced 4.5 Mt. Compared to the prior year period this was slightly higher due to higher efficiency and less disturbances to mining activities. German hard coal imports also increased to 26.7 Mt in the first six months, while overall coal consumption decreased. This indicates that many utilities refilled their coal stocks because of low steam coal prices.

Mainly due to large wind power generation capacity extension and higher availability of wind power in the first half of this year, German gross electricity production from hard coal and lignite decreased to 131.9TWh, representing 41 per cent of total generation.

In Poland production was slightly down on last year and there is currently a period of uncertainty until forthcoming elections are concluded as to how the new administration’s strategy will affect the industry.

In the UK Coal consumption of 17.5 Mt was recorded in the first six months, the lowest since 1830 when the first steam trains appeared.’

This decline is a direct result of the country’s UK carbon tax, according to the report, which has doubled since April to 18.08 GBP per tonne. It is paid when the coal is delivered to power plants, stimulating power plants owners to build large stocks before the tax rose.

On the UK coal market, 25 per cent of LCPD-compliant coal-fired power plants will close by March 2016, (5.3 GW), mainly due to the tax, including: Longannet, Ferrybridge, and Eggborough. The UK’s last deep mine (Kellingley) will close before Christmas.

There was more positive news for the industry in Spain, the Netherlands and Turkey.

Spain saw strong coal-fired power generation increase of 59 per cent, to 22.98 TWh, in the first half of the year, at the expense of hydro generation. Total generation increased by 1 per cent, to 127.89 TWh. That good coal-fired power plants performance led to a rise from 6.2 Mt to 8.8 Mt of coal imports, including anthracite.

In the Netherlands, the report notes that three new coal-fired power plants are scheduled to become operational: an 800 MW power plant in Rotterdam, owned by ENGIE (former GDF Suez); a 1,000 MW power plant at Maasvlakte near Rotterdam, owned by E.ON and a 1,600 MW power plant at Eemshaven, Groningen, owned by RWE.

3,400 MW will be added to the grid; however, capacity totalling 1,800 MW is decommissioned.

Meanwhile 2.1 GW of coal-fired power plants were cleared for construction by the Turkish Ministry of Environment and Urban Planning which, consequently, will lead to increased coal consumption.

The report also briefly references the global picture noting China, the world’s largest consumer of coal, ended its long period of coal demand growth, leading to a drop both in imports and production.

Meanwhile the report also notes that Egypt signed a Memorandum of Understanding to build the world’s largest coal-fired power plant on a single site, 6 GW, which will increase Egyptian steam coal imports to at least 10-13 Mt.

While the problems of the industry in Europe and the US are well documented other strong demand-side growth examples for coal included Turkey, Vietnam, Malaysia, Chile, Pakistan and, particularly, India.


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