Europe sees coal renaissance, but is Powder River Basin coal too late?

2013-02-07T09:30:00Z Europe sees coal renaissance, but is Powder River Basin coal too late?By LAURA HANCOCK Star-Tribune staff writer Casper Star-Tribune Online

Your currywurst sausage imported from Europe may have been cooked with electricity from coal.

Some European countries have taken a renewed interest in coal-fired power generation after the 2011 Fukushima nuclear disaster in Japan. For instance, in Germany, there was a three-month moratorium on permit extensions on old nuclear power plants in 2011.

“Some of them were starting to rethink nuclear,” said Regina Johnson, managing editor for Platts U.S. Coal, a publication owned by the McGraw-Hill Companies Inc.

At the beginning of last year, Arch Coal Inc. opened a sales office in London to sell coal from mines in all regions of the United States, including the Powder River Basin, where Arch owns Coal Creek and Black Thunder mines south of Gillette.

In June 2011, Cloud Peak Energy Inc. sent a shipment of coal to Europe for an unnamed utility to burn as a test.

The Powder River Basin coal was shipped from Wyoming by train, then loaded onto barges in the Great Lakes, following the St. Lawrence Seaway out to the Atlantic Ocean.

Colin Marshall, Cloud Peak’s chief executive, said the test was a success but no additional orders came from it.

Gillette-based Cloud Peak is the only coal company with exclusive operations in the Powder River Basin. It owns the Cordero Rojo and Antelope mines south of Gillette and the Spring Creek mine outside of Decker, Mont.

Gareth Carpenter, managing editor for Platts International Coal, said countries in Europe are importing more than $200 million a year in thermal coal.

“Colombia exports a lot of thermal coal to Europe, Russia as well,” he said. “Obviously the U.S. last year — there was a massive increase in exports from the U.S. in the first half of last year.”

That’s because U.S. coal prices dropped and even with shipping, were cheap for Europeans.

Poland has large reserves of coal. Germany has some coal, but it is a low-rank lignite that is fired at power stations located at the mouths of the mines. The United Kingdom has small reserves. Spain has some coal but it’s burned domestically.

“There’s not really any European exporters,” Carpenter said.

Carpenter does not think the new European love affair with coal will last.

“Although there is kind of a coal renaissance at the moment because coal is cheap compared to gas, I’m not sure it’s going to be a long-term thing,” he said. “I think we reached the peak, really. We could start to see some drop-offs in coal consumption in about five years.”

European countries signed the Kyoto Protocol, an international agreement that requires countries to reduce greenhouse gas emissions.

Internal regulations in the EU also do not help coal, Carpenter said.

“There was a large combustion plant directive which basically gave utilities the option by opt in or opt out plants by certain deadlines basically to conform with new environmental regulations,” he said. “If they decided the plants were inefficient, then they’d opt out and they would have to close by a certain time. If they opted in, they had to invest in those plants and make sure they conformed to the new legislation.”

Reach state reporter Laura Hancock at 307-266-0581 or at laura.hancock@trib.com.

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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