Now, U.S. coal is spreading around the world instead, pushing down global prices. In Europe, that has raised fears among environmentalists that the cheap natural gas in the United States has simply led to higher overall fossil fuel consumption.
One big part of the problem, experts and officials say, is Europe’s cap-and-trade system, which aims to reduce European Union-wide industrial greenhouse gas emissions by 20 percent by 2020. The system is the centerpiece of Europe’s green policies. But the program, which charges industries for permits to emit greenhouse gases, no longer serves as a major disincentive to pollute. Industrial production fell dramatically during the economic crisis, so overall greenhouse gas emissions remain well underneath the cap, and they are still falling. The price per ton of carbon emissions is barely more than a tenth of its 2008 peak. Energy companies, who must plan decades in advance, have shied away from investing in gas-fired power plants because they are not profitable in comparison to coal.
Rise of cheap U.S. coal in Europe
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Europe’s coal use might soon taper off, some experts say. And European lawmakers are trying to prop up the cap-and-trade system by setting more ambitious targets for 2025 and 2030. That would quickly send the price of permits up and make coal less competitive with greener forms of energy.
“The higher the price is for carbon, the worse the business case is for coal, and the better it is for gas,” said Hubertus Bardt, an energy expert at the Cologne Institute for Economic Research.
In addition, American mines might cut back on their production because of the lower prices, thus tightening the global supply and making coal less competitive in comparison to other energy sources, according to analysts.
For now, confronted with a glut of newly available fossil fuel, environmentalists are trying to decide whether it’s best to try to keep it underground.
“What we want to achieve is a reduction in the total quantities of the emissions of greenhouse gases,” said John Broderick, a research fellow at the Tyndall Center for Climate Change Research in Manchester, England. “If we’re serious about this, we would be looking to disincentivize the extraction of fossil fuels.”
Petra Krischok in Jaenschwalde, Germany, and Eliza Mackintosh in London contributed to this report.