There is a tendency to think that coal in Europe is a lost cause.  Whatever our views on climate change, we know that the market for coal in Asia is growing but, at first sight, it can seem that the European coal market is very gloomy with various significant countries adopting coal phase out policies.  However, although it is true that France, Italy, the Netherlands, the UK and even Germany have announced coal phase outs, Germany’s is not for nearly 20 years and there are a host of countries that have no plans to end their use of coal.  Moreover, most of the coal phase outs ignore the continuing need for coal by the steel industry. 

In most countries in Eastern Europe there is no discussion of a phase out of coal, including Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Romania, Slovenia, Turkey, and the Ukraine.

So let’s look dispassionately at some key countries in turn to find the actual prospects for the European coal market.

Germany is the largest importer in Europe of both steam coal and coking coal.  Steam coal imports are currently just under 30 Mt/a.  The multi-stakeholder Coal Commission produced its final report in February 2019.  The government has welcomed its proposals and are putting them into law, even though they do not include a phase-out by 2030 that is necessary to achieve Germany’s Paris Agreement commitments.  Hard coal-fired generating capacity will be reduced from the current 23 GW to 8 GW by 2030 but this means there will still be significant coal imports in 2030.

The Ukraine imports around 12 Mt/a of coking coal and 8 Mt/a of steam coal.  In the past, nearly all of the steam coal has come by rail from Russia, but the ongoing dispute between the two countries has resulted in a recent Russian ban on coal exports to the Ukraine.  The generating companies are turning to Poland, Colombia and the USA and are attracted by the different qualities on offer and the current low international prices.  So this shift could easily become ongoing.

Turkey imports over 5 Mt/a of coking coal and over 30 Mt/a of steam coal.  The government would like this to be reduced by increasing the production of the indigenous lignite.  But this is very poor quality and generally far form centres of demand.  Therefore, although coal imports are likely to fall this year because of high hydro production and other factors, in the medium term imports are likely to remain at least around their present level for several years.  In May, the government reduced the tariff on US coal from the 13.7% imposed in August 2018 to 5%;  this should particularly help US met coal exports.

Poland imports about 15 Mt of coal a year.  It has at least 16 GW of coal-fired power stations that have a normal lifetime beyond 2050, and five new coal plants are under construction.  Poland has a fast growing economy that is mainly powered by coal at the moment and 86% of homes in Poland are heated by coal.  The government has presented a plan to the European Commission that has no reduction in coal production before 2030, despite European emission regulations that would close the oldest power stations.  So there is clearly a continuing market for coal.

The Finnish government plans to end the use of coal for electricity generation by 2029.  There is some environmental pressure to bring this forward to 2025, but the total imports of coal to Finland, which are currently around 4 Mt/a, will only decline slowly before then.

Overall there are about 190 GW of coal-fired generating capacity in Europe, including lignite/brown coal.  Some projections say this will fall to 60 GW by 2030. However, 60 GW are likely to consume at least 100 Mt of coal and a significant proportion of this will be imported.

In addition, coking coal imports to EU are currently just below 40 Mt.  They will only fall a little because there is no substitute for coking coal for making new steel.

You can hear more from Hugh this October at The World Coal Leaders NetworkVisit the website to find out more and see how attending could benefit your business.