Published in the March 2015 edition of RESOURCESTOCKS

The coal industry is under siege from European governments wanting to be able to present their green credentials at the United Nations’ COP 21 (Conference of Parties) in Paris in December, with France announcing it will end its support for coal in developing countries the latest example.

A responsible investment report issued by Norway’s sovereign wealth fund revealed in February that it had divested from 114 companies over the past three years, predominantly involved in gold and coal mining.

In the European Union, the 2030 climate and energy package is still at the top of the policy agenda for the coal industry in 2015.

At the end of last year, EU member states agreed with the European Commission proposal to reduce the EU’s greenhouse gas emissions by at least 40% by 2030, compared to 1990, to increase energy efficiency and to set a new EU-wide target for renewables in final energy consumption of at least 27% by 2030.

EU leaders also decided to establish several funds, including a successor to NER300 which will be used to finance carbon capture and storage and renewable projects. As the package will now go through the European parliament, Brian Ricketts, the secretary general of Euracoal, expects that parliamentarians will propose many amendments. However, it is also expected that under the new political make-up of the European parliament, following last year’s elections, the most ambitious climate and energy policy amendments will struggle to win support, according to WCA’s policy manager Aleks Tomczak.

The EU will also continue its work on the proposal to reform the EU emissions trading scheme.

“The proposal tabled by the commission last year would establish a market stability reserve (MSR) whereby allowances can be moved in and out of a reserve, but not cancelled permanently,” Tomczak said.

In such a form, the MSR is unlikely to affect the competitive position of coal in the EU, according to Ricketts. However, this would change if emission allowances were to be withdrawn permanently – an option which remains possible until a final decision is taken, probably in 2015.

“The new European Commission, officially appointed and approved in November 2014, has already established an image of being pro-business and pro-industry,” Tomczak said.

“One of the objectives of the new commission president Jean-Claude Juncker is to reduce the number of work items in order to improve the quality of decision making. As part of this exercise, the new commission withdrew several existing legislative proposals, including the National Emissions Ceiling Directive which was intended to introduce more stringent limits on emissions of certain pollutants at the national level. The directive is now intended to be modified as part of the legislative follow-up to the 2030 Energy and Climate Package.”

The new commission will continue the work started by the previous team on limiting the emissions of pollutants from medium size combustion plants, such as heating plants.

Tomczak said this proposal would affect coal consumption in central and eastern European countries which rely on coal for heat production in medium size district heating plants.

The EU will also continue its work on the European energy security strategy, which Tomczak said would create an opportunity for the coal industry to promote coal’s benefits.

Ricketts said the document on this subject proposes “more of the same”, which means more renewables, more energy efficiency and more gas pipelines, with virtually no mention of the clear security benefits of coal.