According to BP’s “Statistical Review of World Energy,” released last month, coal consumption in Europe went up 3.3% last year over 2010. Germany, the biggest consumer of coal in Europe, consumed 77.6 million tonnes (85.5 U.S. tons) of coal in 2011, 1.2% more than 2010. Coal consumption in debt-plagued Spain jumped by more than half last year.
That expansion led to a 49 percent jump in imports from the United States in the first quarter of 2012, according to the U.S. Energy Information Administration. The reasons for Europe’s backsliding on coal dependency are purely financial: cheap coal imports from the U.S. have boosted profit margins at coal-fired power plants to a two-and-a-half year high, according to Bloomberg, while carbon permits – the centerpiece of the EU Emissions Trading System – have dropped to prices that make it more reasonable to burn coal and pay for the permits, rather than shifting to renewables or other relatively high-cost fuels. Permit prices have fallen about 17% this year, to around €8 ($10) per ton, even as the EU hands out free “transition” allowances to utilities in Poland and elsewhere.
Natural gas, meanwhile, which has dropped to record low prices in the United States thanks to the shale-gas boom, remains pricey in Europe, making coal the more competitive fuel for power generation. European utilities are actually shuttering gas-fired power plants: Deutsche Bank AG has forecast that 6.4 gigawatts (GW) of power from natural gas plants in Germany, or one-quarter of the country’s capacity, could shut down between now and 2015.
Indirectly, the rush to coal is being driven by Germany’s decision to phase out nuclear power in the wake of the 2011 nuclear accident at Fukushima, Japan. Exactly how Germany – which has been a major coal power since the mid-18th century – will replace generation from nuclear plants remains uncertain, but clearly, for now, coal is the answer. Stating that "fossil fuel-fired power plants are essential for a secure energy supply," a 2011 study from the Economics Ministry in Berlin called for the construction of around 17 major new power plants by 2022. If some of those turn out to be coal-fired plants it will signal a major setback for Europe’s plans for a carbon-free electrical sector and the failure of the EU carbon trading scheme.
“The continent-wide cap-and-trade regime in operation in Europe continues to disappoint, as nations switch back to dirty coal-fired electricity generation,” wrote Alex Trembath in a July 9 analysis for The Breakthrough Institute. Meanwhile the EIA reported that for the first time since the government began compiling monthly statistics, the share of power generation from natural gas in the United States matched that of coal, each accounting for 32% of total generation. The shift to natural gas is powering significant reductions in the emission of greenhouse gases in the U.S.
“CO2 emissions in the United States in 2011 fell by 92 Mt (million tonnes), or 1.7%, primarily due to ongoing switching from coal to natural gas in power generation and an exceptionally mild winter, which reduced the demand for space heating,” stated the International Energy Agency.
Despite the most progressive anti-carbon regulations in the world, Europe, unfortunately, is headed in the opposite direction.
