A new report from the European Coal Association Euracoal revealed that last year the total coal demand in the EU dropped by 22,7% compared to 2022 reaching just 367,7 Mt. The decline for lignite demand is even more severe, falling by a massive 26%. 

According to the association, the main reason for this drop is the EU ETS price described as “high and unpredictable.” The cost for EUAs, which is three to five times higher than fuel costs, is making “coal generation uneconomic, as intended” as well as driving “energy-intensive industrial production away from EU member states.” 

The report also added that “above 100 €/tCO2, neither coal- nor lignite-fired generation make economic sense unless rewarded with very high electricity prices.” The EUAs reached the level of €100 for the first time ever in February 2023, a barrier that was broken through twice in the first quarter of last year.  

Meanwhile, demand for coal in China grew by almost 5% reaching an impressive 4740 Mt.  The country’s current coal fleet is over 1100 GW compared to the EU fleet of just 120 GW. Furthermore, despite President Xi’s pledge to reduce coal use during 2026-2030, around 71% of new coal-fired power plants under construction globally are located in China.

The outcome should not be surprising considering the decarbonisation efforts made by China compared to the same efforts from the EU. Two weeks ago, for the first time ever, the carbon price in China’s national ETS crossed the 100 yuan mark (around €13) while its European equivalent is currently trading more than five times higher.