Europe is where coal’s immediate future is being decided in a head-to-head competition between the economy and the environment.

However, it is a contest that will be played out around the world as governments struggle to keep power costs down while also meeting their self-imposed carbon emission targets.

It will not be an easy fight because in one corner is the politically correct Green crowd demanding less coal be consumed.

In the other are increasingly nervous factory owners who risk being forced out of business by the rising cost of electricity, which is being driven up by the forced purchase of power from renewables and other sources that are more expensive than coal.

What has brought the coal versus alternatives question squarely into focus is the dramatic change underway in the US economy where power costs are tumbling.

It is thanks to the advent of a new fuel source – shale gas and shale oil which, together, will help the US overtake Russia as a gas producer and Saudi Arabia as an oil producer.

As everyone in the coal industry knows, that has led to a surge of US coal exports, with Europe one of the prime destinations (and Asia of growing interest to the Americans) because of the huge arbitrage opportunity made available by what it costs to produce a kilowatt hour of electricity from natural gas and renewables versus what it costs using coal.

According to the latest data from Bloomberg New Energy Finance, power generators in Germany can earn €25 per kilowatt hour when they burn coal or lose €1.1/kWh when they burn gas – one of the fuels which is supposed to be winning market share from coal.

To say the equation does not require a degree in rocket science to figure out that German power utilities prefer coal power is an understatement. Of course they prefer coal and so do the customers who buy the electricity.

However, this is where the question of coal versus other power sources becomes very tricky because the governments of Europe have signed up to strict carbon emission laws that will gradually ramp up the price of coal because of rising carbon taxes.

The same cannot be said of China, India and the rest of the emerging world, where coal remains the “go to” fuel because it is cheap and plentiful, and burning it to produce low-cost electricity provides manufacturers in their countries with an even wider cost advantage over rivals in Europe.

Some Europeans are waking up to the problem they are creating though they are also struggling with the challenge of making environmental rules mesh with economic rules.

Last week, there was a fresh outbreak of the power cost debate and an outbreak of silly comments, when the International Energy Agency said the increasing use of coal in Europe was “close to peaking”, with maximum coal use likely to be reached in 2017.

The response from World Coal Association head Milton Catelin was to largely agree with the IEA and then toss in these bombshell observations, as reported by London’s Financial Times newspaper: “We don’t see this [rising coal consumption] as the renaissance of coal. It’s just economics.”

Just what? Did he really say “it’s just economics”? Because if he did then he is missing the key point in what is happening in the world today where countries that have an energy-price advantage are growing and those forced to pay ever-higher energy prices are not growing.

Europe, for example, is very much not growing.

It is suffering from a crushing debt burden, an overly generous social welfare system, an ageing population, overpaid workers and uncompetitive industries compared with Asia and, quite remarkably, the US.

It is early days in what is shaping as a defining issue of the 21st century but there are already reports of major manufacturers relocating factories out of Europe into Asia and even into the US to capitalise on the energy-cost advantage delivered by low-priced coal-fired electricity.

That trickle of industry out of Europe will grow and possibly become a gusher as factory owners discover they cannot compete with rivals in Asia and their new rival location, the US.

That is why when The Hog saw those words attributed to Milton Catelin – “it’s just economics”, he had to re-read it several times before realising that there really are some people who do not appreciate the significance of the energy-cost versus environment struggle being fought today in Europe but which will spread worldwide – and keep coal as the “go to” fuel option.