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Essential Energy Insights, April 2021


Europe slashes imports of US coal as nations transition to other energy sources

U.S. coal exports to Europe have sharply declined in recent years, falling 40.6% from 2012 to 2017 as many nations began moving away from coal-fired power generation.

The Netherlands, Italy, United Kingdom, Germany and Spain were the top European destinations for U.S. coal through the first three quarters of 2018, accounting for 65.9% of U.S. exports to the continent. All five imported less coal in 2017 than they did in 2012, according to data compiled by S&P Global Market Intelligence.

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The United Kingdom saw the largest percentage decrease over the six-year period, with imports dropping 76.6% to 2.7 million tonnes, while the Netherlands saw a 31.4% decline. Ports in those nations are often the first stop for U.S. coal before it is transported to other European countries, according to Tejasvi Raghuveer, industry economist with the U.S. Energy Information Administration.

Although the Netherlands has been Europe's top importer of U.S. coal since 2014, its coal consumption has remained low, and the United Kingdom is cutting back in favor of natural gas, she said.

In Italy, which has imported the second-most coal so far in 2018, imports declined 58.9% from 2012 to 2017. The International Energy Agency, or IEA, wrote in a Dec. 17 report that Italy consumed 15 million tonnes of coal in 2017, 2 million tonnes less than the previous year, as natural gas displaced some coal for electricity generation.

Coal still accounts for about 37% of power generation in Germany, according to the IEA, and it was the EU's largest overall coal consumer in 2017. Among the top five importers, Germany saw the smallest decline over the six-year period at 11.2%.

While much of Western Europe is "accelerating its coal exit" due to environmental concerns and the expansion of renewable energy sources, Germany is expected to be the last "significant coal consumer" left by 2023, the IEA report said. Meanwhile, coal demand in Eastern Europe has remained stable.

Spain, which turned to coal-fired power in 2017 to fill a gap left by a decrease in hydroelectric output, increased consumption 17.5% over 2016 levels but imported 16.4% less than the previous year and 19.4% less than in 2012.

The European Union's overall coal consumption declined by 1.1% year over year in 2017 to 627 million tonnes, though its lignite consumption increased 2% to 381 million tonnes, according to the IEA report. Thermal coal consumption dropped 7% from 2016 levels to 188 million tonnes while metallurgical coal consumption remained at 58 million tonnes.

The IEA expects coal imports to increase in Asian nations such as South Korea, Vietnam, Malaysia and the Philippines but decline in Europe.