Thermal coal consumption in Europe faces further reductions as reliance on LNG increases, sources said July 25, as prices for imported thermal coal have risen amid anticipation of further heatwaves across the continent.
“European consumption is low, and they are trying to lower further,” a Europe-based buyer said. “There is more reliance on LNG in Europe. Infrastructure for coal logistics will also prevent them from using more coal even if they want to. They need to rely on LNG even when prices are higher. European buyers are also very selective about miners, and they are willing to pay a premium for supply guarantee of good grade coal.”
Over the past week, eight shipments of thermal coal have arrived at European ports, containing a total of 386,300 mt of coal from the US, Colombia, Latvia and the Netherlands, according to S&P Global Commodities at Sea data. The figure was 23% lower than the 503,200 mt of thermal coal that arrived in Europe the week prior.
Six of the shipments from the past week entered the Netherlands, containing 299,800 mt, while 69,700 mt entered Denmark and 16,800 mt entered Germany.
“[Natural] Gas inventories in Europe remain well above normal now for this time of year,” a US-based trader said. “EU gas storage is almost full and the gas demand for generation vs available tonnage, demonstrates the clear availability of spot LNG in the market,” a US-based trader said.
A further expected heatwave across Europe could also aid the displacement of coal, sources said.
“It is very hot across the northern Hemisphere, with record temperatures everywhere, and more to come this week,” a second US-based trader said. “In Europe, wind and solar in the north, with cheap LNG generation in the south, is keeping their grid afloat without coal.”
The heatwave across the continent dried up water levels, which would hamper loading at European ports. Rivers were reportedly too shallow for cargo ships to be fully loaded.
“Low coal probably related to low water level of rivers like Rhine,” an Atlantic-based trader said.
Thermal coal pricing in the European market has risen over the past week amid expectations of record-high temperatures.
CIF ARA 6,000 kcal/kg NAR physical prices ranged between $114.75-$115/mt intra-week, hitting the low point of $114.75/mt July 25, S&P Global data showed. Platts, part of S&P Global Commodity Insights, assessed the CIF ARA 6,000 kcal/kg NAR at 114.75/mt July 25, up 17% on the week from $98/mt on July 18. However, the July 24 price was 25 cents lower on the day and 70% lower on the year from $378.75/mt on July 25, 2022.
“As far as coal producers, they would prefer to deal directly if possible and avoid traders,” a Europe-based trader said. “The primary reason is because both the generator and the producer experience production issues and are amenable to bending schedules instead of pricing everything. Europe has increased reliance on LNG. Nevertheless, such negative factors as coal generation cutbacks, high stockpiles and low gas prices are still in place.”
EU gas storage levels sat at 83.74% capacity as of July 23, compared to 66.27% capacity seen at this time in 2022, Aggregated Gas Storage Inventory data showed. EU member states are required to fill their storage sites to 90% capacity by Nov. 1.
Since Russia’s invasion of Ukraine, European countries saw the importance of diversifying their energy supplies. LNG became an important component of European energy mix, sources said, with the market seeing some long-term purchasing contracts signed to ensure sustainable and secure LNG supplies.
“Sluggish growth expectations across Germany’s manufacturing sector is contributing to weak coal demand within Europe despite thermal coal prices prevalent this year,” analysts at S&P Global said. “Though service firms were ‘cautiously optimistic,’ goods manufacturers are expecting a difficult 12 months amidst competitive disadvantages (globally), high costs, political and economic uncertainty.”
A decision by Poland’s Supreme Administrative Court to repeal a moratorium on the open-pit mine in the Polish-German-Czech border region of Turow has irked policymakers from the neighbouring eastern German state Saxony. Anna Cavazzini, member of the EU Parliament for the Green Party in Saxony, criticised the court for overturning an interim junction by a local Polish court, which in late May had ordered to stop mining at the site due to negative impacts on building stability in nearby regions in Germany and Czechia. Cavazzini said the decision was “not a good sign” for cross-border relations after the German town of Zittau and a Czech NGO had sued the mine’s operators. In contrast, Polish prime minister Mateusz Morawiecki expressed joy at the supreme court’s decision, saying that Poland has “not allowed themselves to be blackmailed by eco-terrorists from the West, particularly those from Germany”, reports the newspaper taz. The court had made the decision on the grounds that the Polish population has a right to a steady supply of energy.
Greenpeace subsidiaries in Germany and Czechia, as well as Zittau authorities, litigated against the mine, arguing the consequences on Germany and the Czech Republic have not been properly considered. Concerns include noise pollution and a reduction of the groundwater level could result in damaging buildings. In 2021, the European Court of Justice temporarily ordered the mine to cease digging, which Poland ignored, reported German public broadcaster ARD. Morawiecki said Poland will not allow the mine to be closed and his government will do everything to ensure it can function as planned until 2044. Cavazzini, on the other hand, said the area could be a leader for Europe as a cross-border example of phasing out coal. Germany aims to phase-out the fossil fuel by 2038, though the coalition government hopes to bring that forward to 2030.
The scheme was originally approved by the European Commission in November 2016 (SA.41161), after which amendments were approved in February 2018 (SA.46891) and in July 2019 (SA.52832), and is due to expire by the end of 2023. Since 2019, the aim of the scheme has been limited to cover only the exceptional social and environmental costs resulting from the closure of uncompetitive coal mines that ceased operations by the end of 2018, such as the costs of social welfare benefits or early retirement, or costs incurred in safety or in site decommissioning and rehabilitation.
The amendments to this scheme that were approved today include
its prolongation until the end of 2027
a budget increase by €1 billion (PLN 5 billion) to cover exceptional costs, bringing the overall budget to €3.7 billion (PLN 17 billion)
the inclusion of two additional mines that ceased coal production in 2020 (Ruch Jastrzębie III) and 2021 (Ruch Pokój II)
The Commission assessed the amended scheme under EU State aid rules, and in particular Council Decision 2010/787/EU on State aid to facilitate the closure of uncompetitive coal mines. The Commission found that the amended scheme continues to be necessary and appropriate to support the closure process of mines that ceased operations, by (i) providing financial support to workers who have lost, or will lose, their jobs due to the closure of the mines, and (ii) helping to secure mine shafts and decommission mine infrastructure, repair damage to the environment caused by mining and re-cultivate land after the mine closures. Furthermore, the Commission found that the aid amounts do not exceed the exceptional social and environmental costs incurred. On this basis, the Commission approved the amended Polish scheme under EU State aid rules.
The non-confidential version of the decision will be made available under case number SA.100533 in the State Aid Register on the Commission’s competition website once any confidentiality issues have been resolved.
Source: Luhansk Oblast Military Administration on Facebook.
Quote: “The occupiers have declared another nine coal-mining businesses in Luhansk Oblast unpromising,” the message reads.
The Luhansk Oblast Military Administration adds that the businesses will be transferred to the Mine Restructuring Department for further liquidation. The personnel needed for the technical maintenance of these mines will also be transferred there.
In addition, the workers will face a significant reduction in wages and subsequent layoffs, the administration emphasises.
Background:
In the temporarily occupied territories of Luhansk Oblast, Russian invaders were conducting raids to remove the hryvnia from circulation.
The occupiers in Luhansk Oblast prepared a list of mines that they considered unprofitable; from some mines, the Russians took out equipment every day, and 700 miners were offered to look for new work.
Poland’s government has outlined details of the billions of zloty it is proposing to pay state energy firms to buy their coal assets.
[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_empty_space][vc_separator][vc_empty_space height=”10px”][vc_row_inner][vc_column_inner width=”2/3″][widget-SocialWidget][/vc_column_inner][vc_column_inner width=”1/3″][link url=”https://notesfrompoland.com/2023/07/17/polish-government-outlines-offer-to-buy-coal-assets-from-state-energy-firms/” content_text=”News source”][/vc_column_inner][/vc_row_inner][vc_empty_space][vc_column_text]The move is part of a process to create a new separate entity to gradually wind down the use of coal and allow other energy firms to focus on developing lower-emission sources.
The four firms – PGE, Tauron, Energa and Enea – on Friday received a proposal from the state assets ministry on behalf of the state treasury. It outlined purchase prices and debt settlement mechanisms that will now be negotiated further.
Enea would receive almost 2.5 billion zloty (€560 million) for its shares in Enea Wytwarzanie – Poland’s largest producer of electricity from hard coal – and 632 million zloty for Enea Elektrownia Połaniec, a coal power plant. The state treasury will also provide guarantees covering up to 70% of 2.4 billion zloty in debts owed to Enea by the subsidiaries.
A similar purchase amounting to 849 million has been proposed to PGE, 153 million to Energa and a symbolic 1 zloty to Tauron. PGE and Tauron have also been offered deals relating to debt owed by their subsidiaries.
The state assets ministry notes that the offer made on Friday is part of the “final phase” in setting up an entity called the National Energy Security Agency (NABE), which was approved by the government last year.
NABE is being created to take control of state energy firms’ coal assets, which in turn is supposed to help those firms more easily obtain financing for investment in cleaner forms of energy.
“NABE will guarantee energy security in the transformation process,” wrote the ministry on Saturday. It noted that, as a result of EU climate policies, “financial institutions have been limiting their involvement in financing entities with coal assets”.
Wojciech Dąbrowski, the CEO of PGE, said that he welcomed the ministry’s proposal, which would help his firm with “obtaining financing for investments in line with the strategic direction that we – as a leader of the energy transformation in Poland – have set for ourselves”.
Shares in the four state energy firms subject to the proposal rose this morning – 30% for Enea, 24.7% for Tauron, 20% for PGE and 4% for Energa – notes financial news service Bankier.pl
Under plans being developed by the government and state energy firms, Poland’s first nuclear power plant is due to open by 2033, with two more to subsequently follow.
Recent years have seen a rapid expansion in renewables, especially solar, in Poland. The government and state energy firms are also planning to develop both offshore and onshore wind in the coming years.
Germany’s coal companies are following large multinational miners in cleaning up their image, with critics concerned that restructuring plans may set the stage for emissions to rise further.
[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_empty_space][vc_separator][vc_empty_space height=”10px”][vc_row_inner][vc_column_inner width=”2/3″][widget-SocialWidget][/vc_column_inner][vc_column_inner width=”1/3″][link url=”https://www.miningweekly.com/article/german-coal-plants-follow-steps-of-large-miners-to-clean-image-2023-07-14″ content_text=”News source”][/vc_column_inner][/vc_row_inner][vc_empty_space][vc_column_text]The owner of the country’s second largest coal miner said last week that it will split off its dirty operations from renewables, becoming the latest among several companies to do so. That’s similar to moves by fossil-heavy corporations including Teck Resources and Anglo American, both of which have made efforts to restructure their businesses to get coal assets off their books, rather than shutting them down altogether.
A key risk is that owners of dirty spun-off assets will continue to run them with less pressure from shareholders to go green. While coal plants were considered critical for ensuring Germany’s energysecurity during last year’s crisis, companies seeking more favorable financing options are trying to get such assets off their books.
“The pressure from the financial sector — banks, investors, insurance companies — on operators of coal-fired power plants to divest from their ‘dirty’ business is increasing worldwide,” said HannsKoenig, Managing Director Central Europe for Aurora Energy Research. “Emissions can of course also rise after such a transaction if the new owners continue to operate power plants.”
While the idea of spinning off dirty businesses has been underway for a while among large multinationals — with Anglo American completing the demerger of its South African coalbusiness in 2021 — it has only recently gained momentum among German coal operators.
Czech energy company EPH – which is led by billionaire DanielKretinsky — announced last week that it will transfer its German lignite operations into a new sister company, EP Energy Transition. “As a result, EPH will be almost free from all of its current coal assets by 2025 and will completely abandon coal as a power generation source by 2030,” it stated. While the new firm should also invest €10-billion into renewables, the coal plants under the new company are expected to run until 2035-2038, according to the group’s sustainability report.
Last year, the country’s largest coal operator RWE came under pressure from an activist investor to separate the German utility’s lignite unit from its clean-energyoperations, but the proposal was voted down by other shareholders. In October RWE committed to end coal in 2030 — eight years earlier than previously planned — and has since floated plans to spin off its lignite operations into a state-run foundation.
In contrast to the situation for larger global players, the push in Germany is also coming from small shareholders and municipalities rather than big investment or pension funds. STEAG — a hard-coal burning company largely owned by communal utilities — has worked on the separation of its green operations since last year, and announced the creation of its new renewables subsidiary Iqony this January, while coal assets will continue as STEAG Power GmbH.
The advantage for the green business is that it gets “more visibility, bank financing and makes it much easier to place our services with customers,” according to Iqony Head of Communications ChristophDollhausen.
The possible consequences for emissions might be exemplified by a similar event in 2016, when Swedish energy company Vattenfall AB sold its lignite operations in eastern Germany. The utility said the transaction wiped out 57 million tons of annual CO2 emissions from its portfolio. But the emissions did not vanish: EPH bought up the assets, and restarted the already mothballed coal plants during last year’s energy crisis.
EPH insists on burning coal until 2038 — whereas Vattenfall had announced plans to cut 55% of its emissions by 2030.
“If Vattenfall were still the operator in Germany now, it would never have been able to justify such a long coal operation, and would probably have shut down the plants sooner,” said SebastianRötters, energy campaigner of Urgewald, a non-profit environmental organization.[/vc_column_text][vc_empty_space][epic_post_tag compatible_column_notice=”” font_size=”17px”][/vc_column][vc_column width=”1/6″][vc_text_separator title=”LATEST NEWS” color=”juicy_pink”][vc_empty_space height=”10px”][widget-LatestPosts post_number=”4″][vc_empty_space height=”10px”][vc_text_separator title=”MOST POPULAR” color=”juicy_pink”][vc_empty_space height=”10px”][widget-popular-posts post_count=”4″][vc_empty_space][vc_wp_search title=”Search”][vc_empty_space][lvs display_like=””][/vc_column][vc_column width=”1/6″][/vc_column][/vc_row][/vc_section][vc_section][vc_row][vc_column][distance desktop_type=”50″][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][epic_block_28 compatible_column_notice=”” number_post=”6″ post_offset=”0″ first_title=”You may also like”][/epic_block_28][vc_empty_space][/vc_column][vc_column width=”1/2″][epic_hero_5 compatible_column_notice=”” hero_margin=”0″ content_filter_number_alert=”” post_offset=”0″][/vc_column][/vc_row][/vc_section]
[vc_section][vc_row][vc_column][distance desktop_type=”30″][lvs][distance desktop_type=”30″][vc_btn title=”Source – Financial Review” color=”sky” i_type=”material” i_icon_material=”vc-material vc-material-perm_device_information” add_icon=”true” link=”url:https%3A%2F%2Fwww.afr.com%2Fworld%2Feurope%2Fglencore-boss-pushes-on-with-coal-behemoth-20230711-p5dnet|target:_blank”][distance desktop_type=”30″][vc_column_text]Glencore’s CEO, Gary Nagle, is considering spinning off the company’s coal business, a move that would have been unthinkable when he took office two years ago. At the time, Glencore had just expanded its ownership of the Cerrejón thermal coal mine in Colombia, and coal prices were soaring due to geopolitical tensions. However, with growing concerns about climate change and shareholder pressure, Nagle sees the potential for a separate coal company. Glencore is currently in negotiations to acquire Teck Resources’ metallurgical coal business and merge it with its thermal coal business before spinning off the new entity on the New York Stock Exchange.
Nagle, who began his career in the coal industry, is willing to defend the role of coal in the energy transition, arguing that both thermal coal and metallurgical coal have a place in the world. He acknowledges the need for steam coal to meet current energy demands and highlights the importance of metallurgical coal in steelmaking until alternative technologies become more widely available. However, Glencore’s emissions are significant, with the company emitting 380 million tonnes of carbon dioxide equivalent in 2022, comparable to the emissions of countries like the UK and Spain.
The proposed spin-off plan has divided shareholders. Some, like Bluebell Capital, have called for Nagle’s resignation, claiming that the coal deal contradicts Glencore’s climate goals. Others support Nagle, believing he has the necessary experience to lead the spin-off successfully. Shareholders and analysts who view coal as a drag on Glencore’s valuation see the potential for increased value in the company’s base and transition metals businesses. Nagle has been expanding these areas, including investments in low-carbon alumina refining and growing the recycling business, which is expected to play a more significant role in the company’s future.
Glencore, the world’s fourth-largest copper producer, aims to increase its copper production. The company has pursued various deals, including attempts to acquire Teck Resources’ entire business. While those attempts were unsuccessful, analysts predict that Nagle’s focus on metals and recycling, combined with the spin-off of coal, will drive further deals. With a strong balance sheet and favorable market conditions for base metals, Glencore is well-positioned to pursue growth opportunities.
As Glencore navigates potential deals and discussions with Teck, the company’s future could take a vastly different shape. Nagle acknowledges the uncertainties and states that not everything is within their control. The long-term outlook for Glencore remains uncertain, but the company is actively adapting to changing market dynamics and seeking opportunities for growth while addressing climate concerns.[/vc_column_text][distance desktop_type=”30″][/vc_column][/vc_row][/vc_section][vc_row][vc_column][/vc_column][/vc_row]
As grids shift from relying on coal-fired generation to more diverse energy mixes, including an increasing proportion of renewable energy, important lessons can be learned on how to maintain flexibility and reliability. The Powering Past Coal Alliance’s recent webinar, “Transitioning Power Grids from Coal to Clean – Solutions from the UK and US,” brought together industry experts from National Grid, California System Operator (CAISO), Pembina Institute, and the German government to discuss how to integrate more renewables and diverse energy sources. The webinar also shed light on unique subnational contexts and common challenges faced by each jurisdiction before affirming that, with the right technical, policy, and planning solutions, these many obstacles can be overcome.
Similar Challenges, Unique Jurisdictional Contexts
The latest IPCC report makes it clear that utilities and governments worldwide must prioritise the phase out of coal-fired power plants by 2030 in OECD countries and by 2040 in the rest of the world. In California, the UK and Germany, grid operators have a common objective of maintaining grid flexibility and reliability as they reduce their reliance on large, centralized coal-fired generation, but the nature of the challenges changes depending on energy systems as well as geography and weather patterns.
Germany
In Germany, coal consumption has halved in 30 years. The country’s coal phase-out date was set for 2038, however the government now aims towards an earlier coal phase-out by 2030.
As well as a strengthened economic structure in its affected coal regions, Friederike Wenderoth emphasised a need for an integrated strategy across all sectors, citing increased interaction between different areas of the energy system and sectors. To tackle this, the German Ministry of Economic Affairs and Climate Protection is developing a cross-sectoral mission statement and a robust energy strategy for the transformation of the energy system.
Elsewhere, the German government is also considering other high-priority challenges, including system stability in terms of voltage, frequency, and resonance stability, the organization of ancillary services, and market design. The transition towards a coal-free and climate-neutral electricity system requires a smart orchestration of the infrastructure, the market, and the technology.
“Germany is a is a member of the PPCA and we support PPCA activities as it supports different jurisdictions in transitioning towards clean energy. Its mission is also to foster the dialogue on the technological economical political and social implications of this transition, and this fully corresponds to the mission of the German energy agency.”
Friederike Wenderoth, Team Leader for Energy Infrastructure at the German Energy Agency (dena)
National Grid
In the UK, a series of market signals and interventions dating back to 2000 including electricity trading & transmission agreements, feed-in tariffs, and electricity market reforms were instrumental in driving the transition and boosting renewables capacity.
In the northern hemisphere, the unpredictable weather makes it challenging to forecast energy generation accurately. Additionally, British utility companies face difficulties in distributing energy generated in Scotland to the southern regions where electricity demand tends to be higher.
National Grid also highlighted the challenges they face with regards to frequency response, grid stability, voltage regulation, thermal constraints, restoration, and energy balancing. These issues are critical to ensuring the reliability and stability of the evolving grid. The integration of renewable energy sources, particularly offshore wind, and the adoption of a holistic network design have been essential strategies in leveraging clean energy capacity.
Finally, the utility also showcased its success in reducing coal generation, from one-third of the generation mix to near-zero levels. The grid also achieved its first coal-free 24 hours in 2017 and ran for 68 consecutive days without coal generation in 2020 –achieved by several important steps across two decades.
“The energy landscape is changing. So as a business we are very keen to share the lessons learned network operators and network owners’ perspectives during National Grid’s journey to decarbonize our power system. We believe that international collaboration is key in order to reach net zero.”
Amir Alikhanzadeh, International Grid Decarbonisation Manager, National Grid
CAISO
California Independent System Operator has made impressive strides into its energy transition. In May 2022, the operator achieved peak generation from renewables, surpassing 100% of electricity demand, with a surplus of 3% exported elsewhere. It has also made significant progress in battery capacity deployment, installing more capacity than anywhere else in the US and learning valuable lessons in leveraging batteries for grid reliability.
But the California operator’s transition to a cleaner grid has faced several key challenges. First, it required implementing and sustaining legislation aimed at reducing the state’s carbon footprint, including setting renewable energy goals and achieving decarbonization targets. In 2002, the state implemented its Renewable Portfolio Standards (RPS), which set California’s renewable electricity procurement goals at 33% by 2020 and 50% by 2030 with the aim of reducing greenhouse gases to 40% below 1990 levels by 2030 and 80% below 1990 levels by 2050.
Effectively integrating renewable energy sources such as solar and wind into the grid was then crucial to meet the state’s renewable portfolio standards while ensuring a reliable and stable energy supply. By incentivising utilities to produce more renewable energy, California’s three largest investor-owned utilities collectively served 36% of the electricity sales with renewable power by 2017. One year later, California introduced Senate Bill 100, which set the ambitious goal of achieving a decarbonized power system by 2045. This groundbreaking policy requires that 100 percent of electrical sales to end-use customers come from renewable energy and zero-carbon resources by 2045, paving the way for a sustainable and cleaner energy future.
“To reach our ultimate goal of 100% renewables by 2045 requires continued investment in clean energy technologies and innovation solutions to ensure good reliability. With the right policies and actions in place, we can create a sustainable future for generations to come.”
Shawn Grant, Operations Policy Manager, California Independent System Operator
Policy and Planning for a Sustainable Transition
The panellists emphasized the need for comprehensive policy and planning to enable the deployment of technical measures. As power grids transition from coal to clean, flexibility becomes a key feature. This flexibility allows for effective management and utilisation of clean energy technologies being deployed, where system planning, cross-sectoral strategies, and infrastructure planning were highlighted as crucial elements in ensuring a successful and sustainable transition.
As a growing number of utilities and jurisdictions look to phase out coal and phase in renewables to within Paris-aligned timelines, discussing common challenges, solutions and lessons learned across different geographies becomes increasingly important. The discussions during the webinar underscored the importance of integrating technical solutions with supportive policies and comprehensive planning to facilitate a successful grid transition. Through knowledge sharing and collaborative efforts, we can expedite the global shift towards clean energy, forging a sustainable and resilient future for the energy sector.[/vc_column_text][distance desktop_type=”30″][/vc_column][/vc_row][/vc_section]
