18 Jan 2021

German Hard Coal Imports Could Fall by a fifth in 2021

18 Jan 2021  by Reuters   

Germany's hard coal imports could drop 18.6 per cent year-on-year to 26.7 million tonnes in 2021, coal importers group VDKi forecast on Friday, citing lower usage by steelmakers during the COVID-19 crisis and price competition with gas and renewables in power generation.

The 2021 decline will mark the sixth consecutive year in which imports have dropped and brings the full-year result down to about half of the 57.2 million tonnes recorded in 2016.

Germany still has an important role in global coal trade flows and pricing as it remains Europe's biggest coal importer.

But coal's days are officially numbered in Germany after the Berlin government last year passed a bill for ending carbon pollution from coal generation by 2038 to curb climate-harming emissions.

VDKi criticised the government's withdrawal schedule as hasty, warning it could undermine supply security, given that Germany will also switch off nuclear power by 2022.

The industry group said there was a threat of a "crash transformation" of German power generation that could cause a supply gap.

It questioned whether new gas-to-power capacity, favoured by policymakers as a back-up for the energy transition, could be achieved and take over from hard coal.

VDKi estimated Germany's conventional power plant capacity could fall to 65 gigawatts (GW) in 2023 compared with 94 GW now. While maximum daily demand could amount to 79 GW and would increase as more electric cars and heat pumps arrive.

Hard coal use within Germany's primary energy mix fell 18.3 per cent last year as cheap gas and prices of mandatory carbon permits increasingly pushed it out of the power generation sector.

The coal importers group also published preliminary data for the past year. It said imports had dropped to 32.8 million tonnes in 2020, a 24 per cent decline from 2019.

It also commented separately on global seaborne coal trade where volumes contracted by 11 per cent last year.

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