The Complex Relationship Between Coal and Gas in Europe
By Nikos Tsafos
Coal-fired generation in the European Union fell by 24 percent in 2019, leading to a sharp fall in CO2 emissions. The decline in coal consumption coincided with a surge in both renewables as well as natural gas, whose prices fell to new lows in 2019. There is a tendency to cheer the role that gas has played in reducing coal use, but that might oversimplify the forces at play. Gas is playing a role in reducing coal consumption in Europe, but that role is neither simple nor straightforward.
In 2019, coal-fired generation fell by almost 150 terawatt hours (TWh), while gas grew by 73.5 TWh—so roughly half the coal displacement came from gas (all data from this joint publication between Sandbag and Agora Energiewende). If one looks at a longer time period, from 2014 to 2019, the rise in gas (+242 TWh) covers almost three-fourths of the decline in coal (-330 TWh). But if one goes back further, to 2010, the picture is less clear. Coal has fallen 349 TWh from 2010 to 2019, while gas has also fallen by 65 TWh—in that time horizon, there is no observable switch from coal to gas.
The year-on-year changes in generation provide a clearer picture. In some years, coal and gas both declined (in 2009, 2013, 2014, and 2018). Occasionally, coal and gas both rose (in 2006, 2007, and 2010). Sometimes, coal rose but gas fell (in 2011 and 2012). And in other years, gas rose at the expense of coal (2005, 2008, 2015, 2016, 2017, and 2019). It is hard to look at the experience of the past 15 years and conclude that there is a systematic and steady relationship between coal and gas in Europe.
In short, gas-fired generation went through a slump, falling 42 percent from 2010 to 2014. Then it picked up—sometimes because the growth in renewables was weak (2016), sometimes to offset hydro (2017), and sometimes against coal. But overall, gas-fired generation in Europe remains below its peak in 2010, although it is edging near that level. So, while low gas prices will continue to push Europe’s coal consumption down, the interplay between coal and gas is complicated and should be discussed with proper caveats and granularity.