Coal generation in Europe is falling and will continue to do so due to competition from cleaner energy sources, such as natural gas and renewables, as well as governments efforts to cut emissions, a study by The Economist Intelligence Unit (EIU) argues.
The UK is leading the way when it comes to reducing coal dependency, helping to put coal’s share of power generation in Europe to well below 25%. According to the report, market conditions and policy factors in both the European Union and the UK will continue to make it difficult for coal to maintain its share of generation in the continent going forward.
The study acknowledges that the use of the fossil fuel use in the power sector did increase in Europe in the first few years of the decade, but says it was a temporary phase and the longer-term trend of gradual decline in the region has resumed.
The trend is more obvious in some countries than in others. While coal still accounts for about 25% of EU power generation, its share of total generation is highest in some east European economies, such as Poland (where it accounts for more than 80% of generation) and the Czech Republic (50%).
Not even the recent price spike seems to be a saving grace for coal. Last year, the thermal kind (used in power generation) was one of the best-performing commodities — its benchmark prize for Asia almost doubled and briefly traded above $100 a tonne for the first time in five years.
But the commodity lost quite a bit of its gains in the first month of the year and it is now trading at around $82 tonne, with the chance of coming under further pressure if governments stick with their ambitious plans to cut emissions.
Demand in and from China, the main consumer, may decrease as the nation battles an endemic case of air pollution, particularly in main cities.
Despite all the challenges, experts agree that the fuel is likely to remain an important source of energy in emerging markets, both in Europe and worldwide.