Spain reduces thermal coal burn 23% in 2016 to 14.6 mil mt

Barcelona (Platts)--27 Feb 2017 633 am EST/1133 GMT

* Domestic coal burn down 43% on year
* Coal drops 8 points in 2016 'thermal gap'
* Spain CO2 emissions seen down 3% in 2016

Spanish thermal coal consumption dropped 23% year on year in 2016 with declines for both domestic and imported coal, data published Friday by the industry body Carbunion showed.

Spain used a total of 14.6 million mt of thermal coal in the year, down from 20.4 million mt in 2015, the group said.

Of this, imported thermal coal accounted for 12.9 million mt, down 26%, while domestic coal accounted for 1.7 million mt, down 43% from the previous year.

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This meant that domestic coal fell to a 12% share of the thermal coal mix in 2016 from a 15% share the previous year and as high as a 33% share in 2011, according to Carbunion figures.

More notably though, Carbunion said, the use of domestic coal in the power generation mix totaled just 1.8 million mt in 2016, down 34% from 2.8 million mt in 2015 and down nearly 80% from 2011.

"This means that domestic coal use in the national generating mix has fallen to below 2% -- beneath the minimum level where it can be an active component in the security of supply policy," the group said.

Endesa, one of Spain's largest generating groups said last week that if there is no change in legislation, it expects to close its three domestic coal-burning plants (Compostilla, Cubillos del Sil and Teruel which have a combined capacity of around 1 GW) by 2020, as it will not be in a position to carry out the required environmental modifications to the plants, leaving it with no option other than to close them.

Of the remaining five domestic coal plants only one, operated by Portugal's EDP, ha confirmed it will carry out the investment to allow the plant to operate within the parameters of the European Industrial Emissions Directive on SOx and NOx emissions specifications.

Meanwhile, in the wider coal market, cheaper oil and gas prices during 2016 have meant that gas has continued to oust coal from the generation mix in Spain, where the two fuels compete to fill the so-called "thermal gap" that is left over once hydro, nuclear and renewable generation have been entered into the generating mix.

Indeed, coal has seen its share of the thermal gas fall by eight points between 2015 and 2016, according to data from grid operator Red Electrica.

Year% of total demand% of thermal gap
Source: Red Electrica de Espana


However, the decline in coal-fired generation during the year has had a more welcome repercussion for the country's drive to meet emissions targets, since it has been cited as the principal factor in an estimated 3% decline in carbon dioxide emissions during 2016, according to a report published Thursday by Spanish group Observatorio de la Sostenibilidad.

This latest figure would mean Spain has nonetheless increased its CO2 emissions by 15% compared with the base year of 1990, although this is down significantly from a peak of a 54% overshoot which it reached in 2008.

According to the group's estimates, Spain emitted 328.7 million mt of CO2 last year, citing a 31% decline in the use of coal (both imported and domestic) in power generation as the main factor.

Official full year 2016 figures on CO2 are due to be published in August by the country's Environment Ministry.

--Gianluca Baratti,
--Edited by Maurice Geller,

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