The United States is moving away from coal as it seeks to clean up its generation profile, but U.S. coal continues to expand into markets overseas. U.S. coal is often cheaper than its European competitors, even when factoring in the cost of transatlantic shipment, according to the Wall Street Journal.
In particular exports of high-sulfur coal from the Midwest are surging at the same time that the U.S. is trying to cut back. Coal can be shipped from Indiana and Illinois down the Mississippi River and out to sea. When it arrives in the United Kingdom, it can sell for as low as $65 a ton, while some British mines sell their coal for $80 per ton.
The U.S. is on track to achieve a third straight year of exceeding 100 million tons of coal exports. And while China often makes headlines for its insatiable demand for coal, the European Union remains the biggest buyer of American coal. In 2013, the U.S. exported 47.2 million tons of coal, more than triple the 13.6 million tons it exported in 2003. That is an astonishing figure considering the concerted effort on behalf of EU member states to reduce their greenhouse gas emissions.
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But it is those efforts to clean up that now give many European utilities leeway to burn more coal now that the economy is weaker. As the WSJ reports, a power plant in Drax, England began burning cleaner biomass to meet stricter rules, but in doing so its sulfur emissions dropped significantly, now giving it flexibility to burn more high-sulfur coal, which is cheaper than low-sulfur coal.
Germany is also a big buyer of U.S. after it decided to phase out its nuclear industry. Germany now imports around 15 million tons of coal from the U.S. each year, up from less than one million tons in 2003.
By Charles Kennedy of Olprice.com
Charles is a writer for Oilprice.com