Focus on Coal
The demise of coal ... but not just yet
There is weakness in core coal markets but there are emerging opportunities on Europe’s periphery, says Frost & Sullivan.
Según Frost & Sullivan, existe una debilidad en los mercados de carbón, pero existen oportunidades emergentes en la periferia europea.
Die Kernmärkte für Kohle schwächeln, aber laut Frost & Sullivan ergeben sich neue Möglichkeiten am Rande Europas.
C
coal-based power generation seemed to be in terminal decline in Europe. However, during the past couple of years coal plants have been working hard and burning coal has suddenly become popular once again. Tis is happening despite the EU’s aim to reduce carbon emissions to 80 per cent of their 1990 levels by 2020. A number of factors have combined to make coal the most popular thermal fuel under current conditions. “Firstly, the North American shale gas
revolution had a direct impact on the coal market,” explains Frost & Sullivan Energy Industry Director Harald Taler. “Rising shale gas output has made the US independent of gas imports and has led to a dramatic decline in the price of natural gas. “As North American utilities started to switch
away from coal towards cheap natural gas, a growing amount of coal was exported rather than consumed locally. Rising American coal exports also came at a time of slowing Chinese demand, which in combination prompted declines in coal prices. “It is not surprising, therefore, that lower coal prices make the fuel much more attractive for European utilities.”
Te second point to note is that natural gas
prices in this part of the world remain stubbornly high.
As European gas is still largely supplied
through long-term contracts where the price is linked to the price of oil, the price difference between coal and gas in the European market has become ever larger, making European utilities eager consumers of coal. Te third point is the failure of the European
Emissions Trading System (EU ETS), which essentially was not able to penalise coal-burning plants. “High coal usage is still expected to continue
for several more years, though to a lesser extent, as some ageing coal plants get decommissioned,” predicts Mr Taler.
Coal capacity However, there is considerable coal capacity under construction, in particular in Germany and the Netherlands, with most of this new capacity coming online in late 2013 and 2014. Beyond the EU, new plants are also under construction in Turkey and the Balkans. In addition, two coal plants have just been completed in Germany. Beyond what is currently under construction,
however, the future projects pipeline looks fairly weak.
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