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UK coal imports from major sources plunge on increased carbon tax

Theincrease in the U.K.'s carbonprice floor, or CPF, to £18 per tonne of CO2 resultedin a massive 69% year-over-year plunge to its thermal coal imports coming fromRussia, Colombia and the U.S. for the first seven months of the year, BIMCOreported Oct. 10.

Totalimports of coal for coal-fired power plants also slumped 64% for the sameperiod, a scenario tagged by BIMCO Chief Shipping Analyst Peter Sand as"one of the most significant effects which has impacted the demand side ofthe global dry bulk shipping industry in 2016," said the report.

Accordingto BIMCO, the CPF is expected to double again in 2020 to £30 per tonne of CO2 and to £70per tonne of CO2 by 2030. "Implementing a tax which increased the totalprice of coal by 138% caused an immediate reaction from the UK coal-fired powerplants," the report quoted Sand as saying. "The dry bulk industry ishugely affected by this, due to a large reduction in long haul thermal coalimports."

Theincrease in CPF in 2016 has led to a 56.7% year-on-year collapse in the U.K.'scoal consumption, bringing it down to 6,839 thousand tonnes for the first fivemonths of the year, compared to 15,800 thousand tonnes of the same period lastyear, said the report.

Accordingto Sand, it will be a "setback for the dry bulk shipping industry" ifthe carbon tax is "adopted by other nations and on a supranationallevel." France for instance, has already imposed a CPF on 30 per tonne of CO2, which is intended to be introduced inJanuary 2017, wrote the international shipping association.