Coal news and updates

American coal feeding European needs

Two stories from either side of the Atlantic Ocean ably demonstrate the interrelations at play in the energy sector.

From Baltimore, The Wall Street Journal’s John Miller reports from a sprawling coal terminal that is at the front line of a booming business: selling American coal to the world. As the article explains, 2014 is on course to be the third straight year of record exports. Europe is the biggest target market, where demand is strong and, thanks to Russia’s annexation of Crimea, likely to grow further.

A caveat comes from Brussels. The European Union’s climate chief, Connie Hedegaard, tells the Journal’s Vanessa Mock that although it is time to look at suppliers of energy besides Russia, this is the moment to make the leap to renewables.

Ms. Hedegaard concedes a lot of work has to be done, not least on a pan-European power grid. Can Europe get it together to boost renewables at the same time as easing off Russian gas? Both are processes that would take at least a decade.

In this sense (as well as some others), Germany is Europe in microcosm, trying to make that exact switch. The New York Times has an overview of how that is going.

On Thursday, the EU’s leaders meet to consider Crimea and climate. The bloc is seeking a 40% reduction in carbon dioxide emissions by 2030, while allowing industry the room to compete.

And there’s the rub. U.S. coal is cheap. Gas is cheap. Renewables, for the most part, are more expensive. European industries such as chemicals and steel are wary of the vast disadvantage they face as the American shale-gas bonanza trims costs of production there.

In the U.K.’s annual budget on Wednesday—a fantastically archaic piece of political theater—manufacturers were awarded a shield from “green” taxes and the heavy industrial users of electricity will be protected from rising renewable costs.

The U.K. is the biggest destination for exported U.S. coal, which brings us neatly back to the Baltimore shoreline.

BP BACK

BP was the highest bidder on 24 oil and gas blocks in the Gulf of Mexico, marking its return to waters offshore Alabama and Louisiana.

As the Journal’s Tom Fowler reports, the $41.6 million deal comes less than a week after a federal ban was lifted that kept the company from doing business with the U.S. government for 16 months.

Among the other bidders was Royal Dutch Shell. The Journal’s Helen Thomas explains why the U.K. major intends to keep splashing the cash on exploration.

MARKETS

Crude futures were down on both sides of the Atlantic Thursday, as the market continues to grapple with mixed signals and refinery maintenance season begins to prompt less crude demand. You can read the Journal’s latest oil-markets report here.

Source: The Wall Street Journal