The production of electricity and coal

COAL

Coal confirmed its global leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production: in particular, demand for coal is shifting towards South-East Asia, where emerging economies are in need of a safe and competitive energy source that they have found in coal, as the fuel of choice for economic and industrial development.

Seaborne world coal trade closed 2020 in negative, with a reduction of -10% on an annual basis (1,157 million tons, compared to 1,292 million in 2019). For the first time after 10 years of continuous growth seaborne coal trade suffers a setback and interrupts a trend that in the last 10 years had led to a 50% increase in volumes.

While Europe in 2020 generates electricity mainly from coal (13.3%) and nuclear (24.2%), cutting the costs of electricity bills by an average 30%, Italy is lagging behind being the only Country in the world without nuclear power and with the lowest share of coal use (8%). (Immagine 1)

The Italian electricity production mix is ​​the least diversified: compared to the G8 countries, which have, on average, a share of around 38% generated by a variable mix of coal and nuclear, in 2020 in Italy the electricity production comes for approximately the 80% from renewable sources and natural gas.

In 2020, Italy reported a decrease in thermal coal imports, with a volume of 5.3 million tons (-29% compared to 7.5 million tons in 2019) and in imports of metallurgical coal and PCI, which reached a volume of 2.35 million tons, with a decrease of 22% compared to 3 million in 2019. (Immagine 2)

Unfortunately, the consequences of these disparities on industrial users are well known: according to the Italian Regulatory Authority for Energy, Networks and Environment (ARERA), Italian companies are constantly forced to face electricity prices of 30% above the European average, with negative effect on the competitiveness in particular in the energy-intensive sectors, characterized by high energy consumption. (Immagine 3)

The planned Italian electricity mix post 2025, with the exit of coal from electricity generation, in a country already without nuclear power, in the immediate future could undermine the competitiveness of our companies on the global market, in favor of emerging countries that have fewer environmental constraints to respect, with inevitable repercussions on GDP.

Our Country is also affected by infrastructural gaps with regards to the regasification plants: there are currently three terminals, one of which is onshore in Panigaglia and two offshore located off the coast of Rovigo and Livorno, for a total capacity of 15,2 bcma. Italy doesn’t seem to be currently able to support a strategy of sources’ diversification as well as to face a potential energy emergency not provided with appropriate plants: this is the only European exception, in a panorama characterized by countries where the regasification covers an average of 50% of the national consumption. (Immagine 4)

Furthermore, natural gas reserves are located in a few countries, politically unstable, such as Algeria and Russia. World reserves of coal are geographically distributed in more than 100 countries and its reserves are placed in very different areas also from the point of view of national political stability. Several studies show that security of supply from coal reserves is 2 times better than from natural gas and 3,5 times better than from oil. Coal can guarantee supply for about 160 years. (Immagine 5)