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Old King Coal

In our recently issued market assessment and sizing, we highlighted what we thought might be a short to medium-term increase in demand for CTRM solutions for coal. Our thinking was that coal is still needed in many parts of the world and while it is and has been fossil fuel enemy number 1 in the EU, elsewhere it remains an essential fuel. So, in spite of regulations in Europe and activist investors and financiers, we suspected there may be a spin out of ‘dirty’ coal trading to avoid any issues and hence a little bit of a boom for Coal systems. Well that may well be so but the Russia-Ukraine war has changed everything and especially coal.

Europe imports 55% of its coal from Russia and many European countries still rely on coal to a large degree – Germany, France, Belgium, Spain, Poland and the Netherlands dependence on Russian coal ranges from 87% in the case of Poland to Spain’s 44% according to the Green Brief. Meanwhile, other European countries like Czechia, Bulgaria, Romania, Italy and Germany have already indicated that they may burn more coal to cut their reliance on Russian gas. Even prior to the war, coal use was increasing and the IEA confirmed that the use of coal for power generation had intensified due to record high natural gas prices in a March report and many emerging nations are also turning to coal for fuel including India where coal consumption will rise every year to 2050 up to 1.5 billion tonnes. Even in the UK, coal is making a comeback as the Government plans to approve a new coal mine in Cumbria. In this instance, the coal produced will be coking coal needed for steel making. Anyhow, coal it seems is making a comeback. How long this will last is anyone’s guess in the current market.

Given geopolitical events and a shifting of priorities, our report may now prove to be pessimistic when we had perceived it to be very bullish. However, the coal market remains just a small aspect of the overall ETRM and CTRM software market. It does seem though that there is potential for a few more coal solutions to be sold over the next year or so.

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