Montel Magazine 1 - 2020 - Page 46

In with LNG, out with coal Europe’s long courtship of LNG is starting to flourish, hastening the region’s break-up with coal. By Laurence Walker » [email protected] But some in industry are not giving up on coal so easily, meaning the fuel will continue to have some presence in the energy mix, albeit marginal, for years to come, analysts say. Coal accounted for 15.3% of Europe’s power generation mix last year, down from 20% in 2018, while gas’s portion – including LNG – rose from 15.4% to 18.2%, according to data firm EnAppSys. That trend will accelerate over the next decade, as many EU nations phase out coal-fired power generation. The flagging demand for coal is not only a result of the region’s push to curb pollution, but it is also a factor of rival gas’s plentiful supply and low prices. “In addition to environmental pressures, this decline in coal use owes much to highly competitive gas prices, due largely to a glut of LNG deliveries, which could result in coal-to-gas switching continuing into 2021,” says Guillaume Perret, director of consultancy Perret Associates, noting only the most efficient coal power stations will remain in operation. The consultancy estimates seaborne thermal coal imports by EU- 15 nations – or those prior to the accession of 10 further members in 2004 – last year plunged 34% to around 64m tonnes and will likely slide further this year, to 53.8m tonnes Meanwhile, Europe’s LNG imports last year exceeded 100bcm, by far outstripping the previous record – set in 2011 – of 80bcm, according to International Energy Agency estimates. Analysts say a continued abundance of LNG deliveries this year could potentially encourage some utilities to bring forward coal phase-out plans.Germany, the EU’s biggest economy, is still devising a staggered coal phase-out by 2038, while the region’s other major economies France, Italy and the UK are all committed to exiting the fuel by the mid-2020s. Yet Poland, where coal accounts for around 80% of the power mix, is yet to pledge a coal exit. “[Phase-out plans] have picked up a bit of momentum over the past year, and I would expect this to continue in 2020,” says Paolo Coghe, analyst at Paris-based consultancy Acousmatics. “Now coal is weak 46 Montel Magazine 1–2020