Coal Era Beckons for Europe as Carbon Giveaway Finishes

[ALS]

The economics for coal are near the best we’ve seen in five years,

Mathew Carr - BLOOMBERG - September 21, 2012

As we shut our Coal plants down Europe and Asia are building new plants of their own. So how is that save the earth from coal agenda working out for the U.S. now ? --Ed.

European utilities are poised to add more coal-fired power capacity than natural gas in the next four years, boosting emissions just as the era of free carbon permits ends.

Power producers from EON AG to RWE AG (RWE) will open six times more coal-burning plants than gas-fed units by 2015, UBS AG said in a Sept. 5 research note. Profits at coal-fired power stations may more than double by then, according to a Goldman Sachs Group Inc. report published on Sept. 13.

The new stations, replacing atomic and aging fossil fuel- based plants, will boost demand for emission permits because coal-fired generators need twice as many credits as gas users under climate protection rules. The price of UN credits may rebound 73 percent by the end of next year from an all-time low on Sept. 18, according to the Euro Carbon Macro Fund in Luxembourg, which manages about $32 million.

“The economics for coal are near the best we’ve seen in five years,” Laurent Segalen, a director at ECMF, said yesterday in an interview from London. Buying UN credits for 2013, after they plunged almost 80 percent in the past year, is “an amazing bargain,” he said. ... [Read More]

[msirach]

Much of the high sulfur coal mined around here is shipped to China. They don't have to worry about expensive pollution control equipment. We have new mines opening.

[herm]

Every last little bit of fossil fuel in the Earth will be dug up.. its just too useful as fuel, raw material for plastics and can even be used to make food. Europe will just have to take the efficiency hit and deploy clean coal power plants if they want to burn it.. lots of opportunity for companies that specialize in coal gasifiers.. hopefully the Chinese will do the same. Eventually everyone will do the same since CO2 and other waste products will become valuable materials... just dumping that stuff is wasteful.

[ILAveo]

The European coal boom doesn't have much to do with current conditions according to the article--“The buildout has nothing to do with low carbon prices,” Hummel said by e-mail on Sept. 14. “All these projects were already decided and kicked off several years ago, during the boom years of the utilities sector.”

If the Europeans unlock significant gas reserves via fracking I'd expect them to establish more natural gas (NG) power plants. As things now stand, it is easier for the US and Australia to export energy resources via coal than NG. If low NG prices in the US persist I'd expect the construction of infrastructure for NG exports to the EU/China.

[msirach]

If we have a cold winter as predicted, the false low price of natural gas is going to skyrocket. The coal plants that have converted to gas use many therms. Throw in the residential and commercial heating load of a cold winter, the reserve supply will diminish and the price will rise.

In May, the price of natural gas was about $2.10 and that has risen to the the $2.50 to $2.60 range. The break even point for our coal is around $2.00. At that, our cost per megawatt is around $22.

[ALS]

Mike, NG is now up to $2.885 as of the close on Friday.

[herm]

2.2 cents per kWh is cheap.. does that include delivery?

[xcel]

Hi Herm:

That price is at the BUS Bar, not on the wires.

Wayne

[50 mpg by 2012]

About 2 years ago I researched coal fired electric generation.

IIRC, China's new coal plants were said to be 50% to 55% efficient compared to US best case 36%.

Of course the degree of emissions abatement of the new Chinese coal plants is certainly up for discussion. But the word is that the new plants are "significantly cleaner" than the ones they force to be decomissioned (by national requirement).

Don't remember seeing any information regarding European coal-electric facilities.


Question: Doesn't most of Europe's NG come from the Russian states and/or the near East?


As for US long term NG pricing ... only up. Just wait a few years for the large LNG facility in the Gulf free trade zone to become operational and watch exports to China, Europe, and Japan to explode. It might be worth checking out construction activity of LNG tankers as well ... just as a possible investment thought.

[msirach]

Originally Posted by herm

2.2 cents per kWh is cheap.. does that include delivery?

As Wayne mentioned, that is the bus bar cost. Last month my usage at home worked out to 9.87 cents per kw. That was with the taxes, delivery, etc.