Coal Demand in Europe Rising despite Green Agenda

Due to the prolonged North Sea shortage of wind and record gas price spikes, the slowdown in wind power generation significantly boosted Europe’s need for coal. While hefty carbon taxes apply to the production of coal energy, increasing its prices, they remain cheaper than gas production, reports Rossiyskaya Gazeta.

The economic boom that followed 2020 has added fuel to a fire. More than doubled coal prices in the last year have seen an increase in demand for energy and steel (whose manufacture needs coal). In January-June 2021, Russian coal exports to Europe grew 2.4 per cent, according to the Russian Ministry of Energy.

The EU’s objective of achieving carbon neutrality remained intact in the meanwhile. Yet, Deloitte’s expert Grigory Grapendaal pointed out, green initiatives may play into the hands of Russia’s coal sector.

He believes that Europe’s coal use may increase in the next several years, given the present rise in gas price and a strong demand for power. In the long term, however, it should take into consideration EU aggressive ambitions to decarbonize the economy as exports decrease.

The scenario has a similar perspective of Finam analyst Alexei Kalachev. In his opinion, this year’s increase in carbon pricing in Europe has been driven by a range of reasons such as energy recovery, weather conditions, gas shortages and high gas prices. 

All these reasons are not permanent, and therefore the EU will not forsake its strategy on decarbonisation. The future of the coal industry, according to Kalachev, is mostly with the nations of South-East Asia.

Due to the strong economic growth rates, the area will continue to increase coal consumption for at least several years, even though the proportion of coal is declining in power generation.