In the ports near St. Petersburg and Murmansk are building new coal terminals for export to the EU, and there take the program to close coal fired power plants. The turn – Germany.
The impression is that the EU and Russia live in a different energy realities. In any case, their views on the future of coal in European energy surprisingly sharply. In the large EU countries, one after another accepted the program of closing all coal-fired power plants over the next decade, 20 September the plan intends to approve the German government. Meanwhile, the Russian ports near St Petersburg and Murmansk invest in the modernization of old and construction of new coal terminals with a clear expectation of high long-term demand in Europe.
What awaits the Russian miners and railroad workers?
So what can we expect on the European market this important Russian export commodity, if you consider that in 2018, more than half of Russian export coal, over 100 million tons, went abroad by rail and sea just to the West (including Ukraine and Turkey)? The accuracy of the forecast depends on the answers to a number of other issues relating to the prospects of the economy and social situation in Russia.
For example, what should such a large and influential social group, like the miners and the coal-mining regions of Russia, especially Kemerovo region: on a sustainable income, their growth or deterioration in the financial situation and even the loss of jobs?
To what extent will be provided with orders of the Russian railway workers, because coal accounts for almost a third of all freight state-owned Russian Railways? And will not the incorrect the huge investments that are going in Russia now on the construction and expansion of coal terminals in the Baltic sea and the Barents sea?
The closure of coal power plants in Europe
The situation in the EU is quite clear: the major economies of Western Europe, one after another take, mainly for environmental reasons, the decision to discontinue the use of coal in the energy sector. The UK is planning in 2022 to bury from 7 coal-fired power plants, the latter will stop in 2025-m. In the same year from the coal refuse Italy.
France has promised to accelerate planned for 2023 closure and without that not having her large values of coal-fired power plants and to implement it already in 2021-m Netherlands at the latest by 2030-m will cease to burn coal to produce electricity, the first of five coal-fired power plants are going to disable 2021-m. Sweden intends to do without coal 2022-th, Austria – the latest from 2025, Finland – with the 2029 th.
The environmental programme of the German government
Now turn to Germany, Europe’s largest economy. On 20 September the German government is under strong public pressure to take a long time preparing a large-scale program to reduce emissions of carbon dioxide CO2 in order to ensure that the commitments undertaken in the Paris climate agreement. An important part of the program will be the plan of abandonment of coal, the most polluting fossil energy source.
In General, the plan is already known, it was introduced in January specifically created the coal Commission, but the government can still change some of the key indicators. For example, the speed at which will disable the power plant. Some work on coal, and after closing in December 2018 last in Germany, mine now only import. Others use brown coal mined in Germany.
It is possible to assume that in the interests of the German coal-mining regions, to those power plants that burn imported fuel. Judging by the draft decision, the existing capacity running on coal in German power plants in the years 2020-2022 can cut more than a quarter: from 21 to 15 gigawatts.
Therefore, in the shortest possible time by roughly the same amount is expected to decrease and imports of coal. And its main supplier in Germany – Russia. According to the Federal statistical office of Germany (Destatis), Russia provided last year and in the first half of this about 45% of all deliveries to the German market – more than the United States, Australia and Colombia combined. The volume of deliveries amounted to 2018 of 17.64 million tons, from January to June of 8.47 million tons.
New coal terminals in the Baltic and Barents sea
So, in the next two to three years in Germany and in the UK, the Netherlands, France due to the closure of power plants, we should expect a sharp decline in demand for imported coal. All of these countries are still among the largest European markets for Russian coal miners. What is the reaction of coal companies and the government of the Russian Federation?
They build ports to facilitate exports to Europe. Currently, in the Leningrad region in Primorsk is being constructed a new coal port terminal in Ust-Luga modernizarea acting in Vysotsk in addition to the planned second. At the same time many large organizations, the construction of the coal terminal Lavna.
All these ports, especially the Baltic, focuses, naturally, primarily on the markets of Central, Western and Northern Europe. All these objects should enter into operation in 2020-2022 years – in the midst of the implementation of European programs of the rejection of coal.
Russian coal miners question the plans of the European Union
But the Russian coal miners and the Russian authorities, both Federal and provincial, all this didn’t seem concerned. Why? One possible explanation: they just don’t believe in the reality and feasibility of the European plans, as the Russian gas and oil for a long time did not believe in the shale revolution in the United States.
Moreover, the experience of recent years in Europe, indeed, was to the contrary: the import of very cheap Russian coal increased, especially in Germany, which expanded procurement in Russia from 12.62 million tons in 2014 to 17.64 million tonnes in 2018: increase by 40% in five years. But it was just one of those egregious deviations from planned environmental objectives, which the German government has on 20 September to take firm and even drastic measures.
The unbelief of the Russian coal industry surely is very common in Russia’s dismissive attitude toward renewable energy (RES) and their potential, because in most cases they should replace close to the EU coal-fired power plants.
Perhaps another explanation, not excluding the first, the construction or expansion of coal terminals in the Northwest Russia is connected not only and not so much with the assessment of the market prospects in Europe, but with a policy Directive from Moscow. The Russian leadership is required to redirect the traffic, while walking through the Baltic, in home ports. Here they are building, to continue, for example, to export coal through the port of Riga.
Not ruled out this argument: even if Western Europe will eventually refuse coal from ports on the Baltic sea it is possible to supply buyers in southern Europe, North Africa or the middle East, and from Murmansk along the Northern sea route customers in Asia.
However, for deliveries in the South-Eastern part of the EU, where, indeed, from coal not going to give up (but where electricity demand is significantly lower than in the major industrial powers of Western Europe) new coal terminals it would be better to build on the Black sea. However, the extension of the port in Taman, as it became known in early September, the Russian coal sector, and the interest was just lost.
It turns out cutting the eyes contradiction: while on the North-West of Europe declares the renunciation of coal, in the North-West of Russia is investing tens of billions of rubles in the infrastructure for its export.