The Trump administration’s planned large-scale expansion of the US coal industry will increase supplies on global markets, but it will do little to reduce energy prices in the European Union. The main obstacle to cheaper electricity in Europe remains the Union’s strict climate regulation, particularly its emissions trading system.
The administration has unveiled a financial package worth around $700m to support coal-fired power plants and the construction of a new export terminal on the US west coast. The move is intended to enable a sharp increase in US coal exports, putting downward pressure on global prices. European countries that still use coal may therefore benefit from cheaper fuel, but the effect on consumers’ bills will be minimal.
Cheap Coal, Expensive Power
Even if US coal were the cheapest available, European coal-fired power plants would still face substantial costs for their carbon dioxide emissions under the EU Emissions Trading System (EU ETS). Emission allowances therefore make coal-fired electricity artificially expensive in the EU and wipe out the price advantage of cheap imports.
