The Green Deal is working: Coal price explosion in Europe too

Coal prices in Europe have risen to a nine-year high due to a combination of growing demand and supply constraints. After all, with the Green deal those who dare to invest in the research or extraction of an energy source that everyone considers to be condemned.

According to Bloomberg, prices for first-year coal futures on ICE Futures Europe have surpassed the $ 101 per ton mark, reaching levels not seen since 2012.

This summer, demand for coal-fired power has increased amid record heatwaves across Europe and rising natural gas prices. Coal has become a much cheaper energy source since Russia tightened gas markets and caused a supply storage crisis. So several countries with coal plants have been running them to their fullest, sending demand skyrocketing.

Coal supplies are dwindling as power companies build stocks ahead of Europe's winter heating season. At the same time, coal supplies from some emerging market countries have been cut off due to social unrest and logistical problems.

Coal prices around the world have risen this year. The prices of coal exported from Australia are at the highest of the decade, while the costs of coal imported into Europe from China have also increased, which, for its part, has restarted both the production and the operation of power plants powered by this fuel.

The latest report from the International Energy Agency shows that coal-fired electricity production will increase by 3% in 2021 and by 3% next year, after declining by 4.6% last year. A good answer to those who talk about decarbonisation, an objective that remains a chimera without the availability of alternative energy sources.

"Normally you have enough supply elasticity in the coal market that whatever happens in the gas market doesn't affect coal much," said James Waddell, head of European gas at Energy Aspects Ltd. "But because stocks are so low in Europe , and you have no mechanism to bring more supplies quickly, gas is also increasing coal ”.

European first-month and first-quarter coal contracts have been trading above $ 100 per ton since mid-June. Continuing supply problems are driving up prices for the next year.

"The markets have had sustained demand, but frequent supply interruptions have also continued, reducing the ability to replenish depleted storage," said Andy Sommer, head of fundamental and model analysis at Swiss trader Axpo Solutions AG. , in a report on Monday. "On the coal side, this has been caused by social unrest and railway problems in Colombia and South Africa."

Obviously, this contemporary price explosion in both the coal and natural gas sectors is driving energy prices up and sending them even higher over the course of the winter. It does not seem secondary that it will be necessary to worry about supporting families with lower incomes who risk not being able to pay their super bills. In the meantime, however, there is talk of the Green Deal, even at the cost of sending a slice of Europeans to the cold, and without any, whatsoever, energy planning.

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The article The Green Deal is working: explosion in coal prices also in Europe comes from .

This is a machine translation of a post published on Scenari Economici at the URL on Wed, 11 Aug 2021 10:18:58 +0000.