US coal exports to Europe boom
This news from Europe makes one wonder is the world has turned itself upside-down.
Bloomberg: “Demand for coal, the dirtiest fuel for making electricity, grew 3.3 percent last year in Europe while sales of less- polluting natural gas fell 2.1 percent, the steepest drop since 2009, according to a BP Plc report. Germany’s EON and RWE AG (RWE), the biggest utilities in Europe’s largest power market, are considering shutting unprofitable gas-fired plants even as Chancellor Angela Merkel promotes gas to replace nuclear energy.”
On the west side of the Atlantic a glut of natural gas has resulted in a large reduction in coal used in power generation while on the east side of the Atlantic that same natural gas glut has resulted in an increase in coal consumption.
The driver has been the low cost of imported US coal. These imports have driven coal prices down 26% year-over-year according to Bloomberg. This has ironically resulted in putting high price natural gas at a disadvantage in Europe where it is priced off crude oil’s price.
Once the prices of both natural gas and coal come back into better balance in the U.S. this situation will change. North American natural gas prices must climbing back above the cost of production. The timing is the only unknown. For now coal is the hottest energy source in Europe turning the concerns over carbon emissions upside-down.