Analysis Shows Drop Demand for Coal, Natural Gas in the EU

A think-tank based in the United Kingdom recently conducted an analysis which revealed that countries in the EU are using less natural gas and coal to generate power in comparison to previous years. This is despite the current energy crisis brought on by Ukraine’s invasion by Russia.

Ember’s analysis revealed that between October 2022 and March 2023, coal-powered generation in the European Union reduced by 27 TWh. The firm reported that the worst impacts of the energy crisis had been avoided thanks to a decrease in electricity demand, an increase in renewable energy use and a mild winter.

Total consumption of electricity across the European Union declined by 7% in comparison to consumption in the winter of 2021–2022. On the other hand, renewable energies generated about 40% of electricity during the aforementioned period, with solar, wind and hydropower output surpassing natural gas and coal.

The report also highlighted that gas and coal generation would have declined even further if nuclear plants in France had come back online in January. The French nuclear fleet is made up of 56 operable reactors, some of which have maintenance issues that keep them offline.

The firm noted that the drop in the demand for gas for generating electricity also allowed gas to be utilized more efficiently in certain areas such as refilling, heating and storage facilities. The report also shows a 47 TWh decline in nuclear power generation in the European Union, with Ember noting that more than one-half of the decline was directly attributed to French reactors being out of service.

Concerns of a major energy crisis also caused some member states such as Germany to restart coal plants and keep other reactors they had planned to close online. Germany also stored roughly 6GW of power ready for immediate use if need be.

Dr. Chris Rosslowe, the report’s lead author and senior energy and climate data analyst at Ember, stated that despite the energy crisis the EU faced, it overcame the difficult months. However, Rosslowe continued, the European Union would need to completely phase out the use of fossil fuels as quickly as possible to keep the supply of power stable.

The report also found that of all the countries, only Italy, Finland and Hungary grew their coal-fired output. In addition, it highlighted that with a decline in fossil fuel power generation, power sector emissions in the EU during the winter were the lowest they had ever been.

As the demand for natural gas and coal continues on a downward trajectory, major coal extractors such as Arch Resources Inc. (NYSE: ARCH) may need to diversify their operations away from these “dirty fuels” if they are to sustain their profitability over the long-term.

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