Global coal sector sees renaissance this year

By Eugene Gerden

The demand for coal continues to grow in Europe and other global markets due to a crisis in renewables that have been unable to supply stable energy supplies as well as high gas prices, posing a threat to the timeliness of the forthcoming 2021 United Nations Climate Change Conference in the UK Glasgow scheduled for October, 31-November, 12. Issues concerning a further reduction of coal consumption and production on a global scale will be discussed with the participation of more than 100 world leaders.

The recent energy crisis in Europe, when gas prices grew by almost three times, has forced many EU and global nations to think about the renaissance of coal generation, considered by them as a means to deal with the current energy shortage and skyrocketing gas prices.

As part of these plans, large-scale coal mining may soon resume in many countries of the world, including those which in recent years have announced plans to significantly use of coal in their energy infrastructure.

One such country is the UK, whose government may revise its plans for the complete rejection of coal generation after 2024. This is despite the fact that the share of coal in the overall energy consumption of the country does not exceed 1-2%, compared to 20% in case of US and more than 50% for China.

According to initial plans of governments of some major EU states, their still operating coal-fired power plants should be closed by the early 2030s, while the development of some major local coal mines should be suspended. However there is a high possibility that due to the current energy crisis, these plans will also be revised.

For example, Germany plans to keep operating about 15 coal-fired power plants with a total capacity of almost 20 GW after 2030, while plans for further coal mining have been recently announced by the authorities in Romania, Slovenia, Croatia and Bulgaria.

The Ruhr Basin in Germany hosts the richest reserves of brown coal. Coal consumption has been reduced over the past four years by almost a third, from 170 million tonnes to 120 million; however, it is thought that these figures may resume their growth in the short-term.

Finally Poland, one of the major coal-producing nations in Europe, has no plans to close state-owned coal company PGG until 2049.

The Polish Government recently said that it will continue operating the Turow lignite mine on the border with the Czech Republic even after the conflict with Prague and the EU.

Plans for a further increase in domestic coal mining have been recently announced in Russia, where the local authorities together with coal producers aim to increase production of brown coal in the Munayskoye field in the Altai Territory of the country by 6.5 times – up to 650,000 tonnes by 2035.

Finally, the resources minister of Australia, another major global coal producer, recently proposed setting up a government-run A$250 billion (US$180 billion) lending facility for the country’s coal industry in return for supporting a net zero carbon emissions target for 2050.

In general, Australia’s coal industry is suffering from dwindling access to finance and insurance, raising the costs of doing business. This is also due to the remaining tensions with China, which was one of main coal buyers for Australia in the past.

As for China, while the country may stop funding the construction of new coal-fired power plants abroad, it will continue active development of coal generation within its territory. According to the schedule for the next five-year plan, China will build 43 new coal-fired thermal power plants and 18 blast furnaces of the latest generation. Currently, China consumes 4.98 billion tons of coal per year. The total capacity of production facilities is 1,080GW.

Plans for a further increase in coal consumption was recently announced by India which regularly suffers from severe power outages.

According to German Aussiedlerbote business paper, in general the consumption of coal in the EU region for the last 12 months has increased by 15% year-on-year basis, while growth in usage continues.