Coal in the EU – myths and reality Bogdan Janicki, Senior Adviser CEEP 1/30 Coal in the EU – myths and reality Bogdan Janicki, Senior Adviser, CEEP World Coal Association – ę

Bogdan Janicki, Senior Adviser CEEP 1/30

Coal in the EU – myths and reality

Bogdan Janicki, Senior Adviser, CEEP ę i Nazwisko, Stanowisko

December 11, 2014

World Coal Association – Assocarboni Workshop Looking into the future of coal Rome 18.11.2014


Central Europe Energy Partners, AISBL, is an

international non-profit association with its

headquarters in Brussels, Belgium.

The association represents the widely-

understood Central Europe energy sector (coal,

gas, oil, renewables, nuclear, grids), along with

energy-intensive industries (steel, chemicals,

etc.).

CEEP is open to all domestic and foreign legal

entities active in the energy and energy-intensive

sectors, or dealing with any matters related to

the mentioned sectors.

There are three categories of membership:

actual, affiliated and honorary.

Central Europe Energy Partners (CEEP)


Concern Achema Group Enea S.A. Energa S.A. Grupa

Azoty S.A. Impexmetal S.A.

Jastrzębska Spółka

Węglowa S.A.

Katowicki Holding

Węglowy S.A.

Kompania Węglowa S.A

Kulczyk Investments Litgrid AB LOTOS Group

Air Liquide

New World Resources N.V.

ArcelorMital Poland

Polish Higher Education – Business

Forum

PSE S.A. SiPower S.A. Tauron Polska

Energia S.A

TRANSPETROL a.s.

The Petroleum-Gas

University of Ploieşti

Węglokos S.A.

CEEP members

Expected members from: Bulgaria, Estonia, Latvia, Slovenia, Croatia, and Hungary.

KGHM Polska

Miedź S.A.

The Polish Electricity Association

PERN Przyjaźń FRUNZE

CLIFFORD CHANCE


CEEP's primary purpose is to support integration of the Central Europe Energy and energy-intensive sectors within the framework of the common EU

energy and energy security policy.

The association acts to:

¢  Identify, monitor, and where possible, aim to reduce specific and common risks to energy and energy-intensive sectors companies in Central Europe.

¢  Find solutions for and provide assistance, in relation to fundamental challenges arising from the evolution of EU energy policy, to organisations, such as members of the association.

¢  Foster, broaden and strengthen the position of its members within the internal EU energy market.

¢  Transmit and make available to EU bodies, and other international energy and energy-intensive sector institutions, CEEP members' positions on and expertise in energy and energy-intensive sectors issues, especially, but not limited, to the region of Central Europe.

¢  Support its members' efforts to build up their profile and active participation in the international energy and energy-intensive sectors’ institutions and associations; and

¢  Identify, advise on, and promote programmes and activities which strengthen and expand members' international positions.

Purpose and Mission


¢  To increase the energy security of Central Europe, as well as the European Union as a whole. ¢  To strengthen the idea of energy solidarity within the European Union. We do believe that only common activities of all EU member states could be successful in enhancing the energy security of Europe. ¢  To build relations and facilitate contacts between Member organisations and EU bodies and agencies, individual representatives and associations of energy and energy- intensive sector companies, as well as international energy sector think-tanks and lobbies based in Brussels.

Major tasks:


European Union

Saturated EU Economies

Non saturated EU economies GDP per capita in 000’ EUR, 2013 year

European Energy Security from a Central European point of view

GDP per capita in 000’ EUR 2013 year

Source: CEEP based on Eurostat data

* 2012 data


2005 2006 2007 2008 2009 2010 2011 2012 2013

saturated economies 26.7 27.8 29.2 29.2 27.5 28.3 29.1 29.7 29.8 non saturated economies 6.3 7.1 8.3 9.4 8.3 9 9.5 9.7 9.8

0

5

10

15

20

25

30

35

GDP per capita ( 000’EUR) UE 28

Source: CEEP based on Eurostat data


Energy Prices (EUR/MWH)

Nuclear energy

Lignite

Hard coal

Natural gas

Fuel oil

Gas oil

Source : Central Mining Institute In times of crisis,

EU countries need cheap sources of energy

Solid fuels are cheapest


¢ The European Council endorsed a binding EU target of at least a 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990

•  The ETS sector would have to deliver a reduction of 43% in GHG compared to 2005

•  The non-ETS sector a reduction of 30% compared to 2005

In order to bring about the required emissions reduction in the ETS sector, the annual factor by which the cap on the maximum permitted emissions within the ETS will have to be increased from 1.74% currently to 2.2% from 2021.

European Council decisions – 23.10.2014


¢ A greenhouse gas reduction target of 40% should by itself encourage a greater share of renewable energy in the EU of at least 27% in 2030 (indicative for Member States)

¢  Member States with a GDP per capita below 60% of the

EU average may opt to continue to give free allowances to the energy sector up to 2030

¢ 10% of the EU ETS allowances to be auctioned by the

Member States will be distributed among those countries whose GDP per capita did not exceed 90% of the EU average (in 2013)

European Council decisions – 23.10.2014


What next after European Council decisions?

Reform of the EU Emissions Trading System (ETS) - the Commission proposed to establish a Market Stability Reserve (MSR) – expected CO2 price: 40EUR/t According to the plan, at the begining of December 2014, the draft proposal will be circulated by the Commission for public consultation. The final document is expected to be confermed by the end of this year Free allowances for the energy sector – only for existing Power Plants or also for new Power Plants? Carbon leakage - appropriate levels of support for sectors has been declared by the Council. But at what level, and what sectors?. Benchmarks – what will be the rules of benchmarks for each industry sector?

Before us is a hard Hme to win the best soluHon for Central European economies

Before the EU is a difficult challenge to create specific rules for targets adopted by the European Council


Electricity retail prices paid by households and industrial consumers in 2011 (in EUR/ kWh )

Source: Eurostat energy statistics

Note: Range for annual consumption of: household group DC: [2 500 kWh – 5 000 kWh]; industry group IC: [500 MWh – 2 000 MWh].


GDP per capita (EUR) vs. electricity prices paid by households and industrial consumers (EUR/kWh) in 2011

INDUSTRY HOUSEHOLDS

Source: Eurostat energy statistics

Note: GDP in Romania – data for 2010


Source: ERT Benchmarking Report 2013

EU industry production


Compe..ve advantage/disadvantage

USA – low energy prices ( shale gas revoluHon)

EU – high energy prices ( EU climate policy)

Unemployment rates: EU-28, US

The EU needs cheap energy to be compe..ve

Source: European Commission

US versus EU


Competitiveness of the EU economy depends on energy prices

Source: World Energy Outlook 2012


Evolution of end - user electricity price index for industry

Source:Euracoal


CO2 emissions per capita (kg/cap) 2012

Source: JRC

2011 2012 2011 2012 2011 2012 Belgium 9,89 9,58 Malta -‐-‐-‐ -‐-‐-‐ Latvia 4,27 4,33 Denmark 7,83 6,97 Netherlands 10,03 9,82 Lithuania 5,29 5,26 Germany 9,59 9,75 Austria 8,94 8,38 Hungary 5,18 4,93 Ireland 8,60 8,48 Portugal 4,62 4,62 Poland 8,67 8,42 Greece 8,18 7,79 Finland 10,97 9,88 Romania 4,08 3,91 Spain 6,22 6,12 Sweden 5,27 4,84 Slovenia 8,49 8,46 France 5,81 5,85 U.K. 7,55 7,73 Slovakia 7,34 7,42 Italy 6,69 6,32 Bulgaria 7,71 7,10 CroaHa 5,44 5,51 Cyprus -‐-‐-‐-‐ -‐-‐-‐ Czech Rep. 11,41 10,81 Luxembourg 21,92 21,75 Estonia 15,82 15,75

2011 2012 USA 17,12 16,36 Canada 16,33 16,04 Australia 19,36 18,77 Japan 9,77 10,40 Russia 12,41 12,39 South Korea 12,90 12,97 China 6,91 7,09 India 1,51 1,59 Brazil 2,27 2,31 Turkey -‐-‐-‐ -‐-‐-‐ Indonesia 2,01 2,00 South Africa 6,30 6,32 EU 7,53 7,42


EU-27 net imports



European hard coal production, lignite production and coal imports 2013


International hard coal market, 2012

Major coal producing and importing countries, 2012

Top coal exporting countries, 2012

Source:Euracoal


EU-27 Gross Electricity Generation



EU Ambitions – wishful thinking?

From 1990 to 2010, the EU is the only region of the world to have decreased its CO₂ emissions (-9.2%). During the same period, competing economies have increased their CO₂ emissions, and total worldwide emissions increased by 46%.

Source: ERT Benchmarking Report 2013, EIA


Fossil fuels – Coal

Source: BP


World - Population, GDP, Energy Demand

Source: Exxon Mobil, CEEP

World population (million)


Electricity generation by source

Source:IEA


Germany: Depletion and new construction of plants (GW)

Source: Poyry Management Consulting


Improving energy efficiency by 15%, means that CO2 emissions can be reduced by at least 30%.

Energy efficiency (%)

Source: Central Mining Institute, EURACOAL, others

Energy efficiency

Significant improvement

30/38


Carbon Capture and Storage

CO2

Capture

Transport

COAL, NATURAL GAS

70% cost

10% 20%

Present technology would increase electricity cost by 30-50%

COAL MINE

ONSHORE OFFSHORE

Storage

Depleted reservoirs, Aquifers

CO2-‐EOR Other possibiliHes ( CCU)

CO2

Source :Petrofac, CEEP

Power plants

Steel industry

Chemical industry

Others

NATURAL GAS FIELDS


Thank-you for your attention

Documents

Coal in the EU – myths and reality Bogdan Janicki, Senior Adviser CEEP 1/30 Coal in the EU – myths and reality Bogdan Janicki, Senior Adviser, CEEP World Coal Association – ę