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Bidding arrivederci to coal?

Imported coal has traditionally played a minor role in Italy’s energy mix, but its struggling heavy industries could benefit from more clean coal as an alternative to gas.

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Italy’s imports of coal are waning, along with demand across the continent. But the nation’s need for the fossil fuel is far from over, as it pursues its own version of Germany’s Energiewende or “energy transition”. But, as Europe’s fourth largest economy heads towards its carbon-neutral goal by the mid-century, its modern coal-fired plants and seaborne imports, in the interim, offer more competitively priced power and a more diversified energy supply.

 

Italy’s overall energy demand has declined for more than a decade, since its 2005 peak, while, in the wake of the 2008 financial crisis, its economy has remained stagnant. An upside over the last decade for the energy import-reliant Italian economy has been lower energy commodity costs, including coal, according to industry body Euracoal, with prices plunging in 2014 and helping to slash Italy’s energy import bill by a quarter in 2015.

 

Power generation

 

Italian electricity production relies heavily on natural gas (38%), with coal making up around 12% of its energy mix in 2016, down by one percentage point from a year earlier, according to Assocarboni, Italy’s coal association. This compares to an average of 28% within the European Union. Coal has provided a low but stable share of Italy’s electricity generation since the 1990s. Coal imports dropped from 17% of the electricity mix in 1990 to 9% in 2000, but, with the conversion of oil-fired units, rose to 16% by 2004.

 

However, Italian industry remains burdened with high electricity costs. In 2016, Italian industry paid around 50% more for its electricity than the European average, according to Assocarboni. Some 90% of Italy’s gas is imported, primarily from Russia, Algeria and Libya, at “unattractive prices”, says Euracoal. Italy depends heavily on imported electricity from France, Italy and Slovenia too, largely from nuclear and hydro, which is expected to grow.

 

Coal imports are under pressure from government policy, however. In 2013, the National Energy Strategy prioritised natural gas and renewables, following a 2011 referendum that rejected a resumption of nuclear energy. With virtually no domestic production of coal, Italy has relied on seaborne shipments to feed demand. Steam coal for Italy’s power generation accounts for around 90% of coal imports. (The nation’s steel industry, Europe’s second largest, is the main consumer of metallurgical coal).

 

Demand for coal has fallen in the years since the financial crisis as Italy’s economy has struggled. Assocarboni reports that thermal coal imports fell by around 13% to 14 Mt in 2016. However, coking coal imports were up slightly, by 400,000t to 3.9 Mt. Italian bulk terminals handled coal mainly from South Africa, Russia, Indonesia, the US, Colombia and Australia. Coal imports decreased by 13% from 2012 to 2013, and stayed at a similar level in 2014. Coal imports had grown from the early 1990s, and peaked in 2008 at 25 Mt.

 

The decline in coal demand has been hastened by the closure of coal-fired capacity and the slump in steel production. Environmental pressure forced the closure of Tirreno Power’s 660 MW Vado Ligure coal-fired plant in 2014. In 2012, Rome approved plans by Engie SA and Energia Italiana for a new 460 MW coal-fired unit. However, the court ruling two years later to close the existing units has stymied development. Meanwhile, troubles at the ILVA steel plant in Taranto are another significant factor in falling coal demand.

 

Phase-out

 

Rome and the utility giant Enel have yet to specify the phase-out of the remaining coal plants. Presently, Enel runs the 2 GW Torrevaldaliga Nord plant near Rome, the 1.3 GW South Brindisi plant, the 80 MW Sulcis facility and the 640 MW Fusina units near Venice. One 600 MW unit, out of four, at La Spezia, is coal-fired, but is partially operational and due for closure. EPH owns the 640 MW Fiume Santo plant, while A2A has the coal and oil burning Monfalcone plant in Friuli Venezia Giulia. ASM has a 70 MW coal power plant in Brescia.

 

However, Enel has committed to a gradual phaseout of investment in coal as it looks to become carbonneutral by 2050. Enel had committed to the shutdown of 13 GW of its overall fossil fuel burning capacity in Italy by 2020, and cancelled its 2 GW coal-fired plant in Porto Tolle.

 

Clean coal?

 

In the meantime, work has been carried out on existing plants to meet green targets. The Federico II coal-fired power plant, one of Europe’s largest, has undergone a €500M programme to improve its coal handling efficiency and environmental performance.

 

There has also been investment in some of Italy’s coalfired power facilities. The conversion of Italian plants from fuel oil to coal, along with modernisation measures, have created one of the most efficient coal-fired power sectors in Europe. Euracoal reports an average efficiency of 40%, compared with the European average of 35%. Enel’s Torrevaldaliga Nord plant has been completely converted and in production since 2009, with Euracoal reporting an efficiency rate of 46%, on a par with ultra-modern facilities in Japan and Denmark.

 

Assocarboni is pushing for the development of ‘clean coal’ processes as a cheaper option than gas. Italian scientists have been at the forefront of developing carbon capture and storage (CCS) technology, including the Sotacarbo Technology Hub for Clean Energy. In March, Assocarboni’s president, Andrea Clavarino, told its annual congress: “Assocarboni proposes to use more coal – through the implementation of the best combustion technologies – and renewables, and less gas, which is expensive and has serious supply security issues.”

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