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Coal

Volume 447: debated on Monday 12 June 2006

To ask the Secretary of State for Trade and Industry what projections his Department has made of the potential difference between the sale price of domestic deep-mined coal and the international Amsterdam, Rotterdam and Antwerp coal price over the next (a) five and (b) 10 years. (74710)

International coal price assumptions are set out in Tables 5 and 6 of “The UK Energy and CO2 Emissions Projections”, published by the DTI in February 2006. These are presented in the following table.

Projections for the market price of UK deep-mined coal are not available.

US$/GigaJoule

Central scenario (favouring gas)

Central scenario (favouring coal)

High energy price scenario

Low energy price scenario

2010

1.50

1.50

1.70

1.30

2015

1.43

1.43

1.70

1.15

Source: DTI.

1http://www.dti.gov.uk/files/file26363.pdf

To ask the Secretary of State for Trade and Industry what his Department's most recent estimate is of the difference between the sale price of domestic deep-mined coal and the international Amsterdam, Rotterdam and Antwerp coal price. (74711)

The available data relate to steam coal (the coal suitable for use in steam boilers, e.g. a coal-fired power station). About 50 per cent. of UK domestic production of steam coal is deep-mined.

In Q4 2005, the domestic steam coal price paid by UK generators (who account for some 80 per cent. of total coal usage) was approximately £1.3/tonne higher than the international coal price1, although in the past it has been up to £12.2/tonne lower.

The following table shows the evolution of the UK steam coal and international prices since 2000. As can be seen, the domestic price has been relatively more stable over the period.

1 “Commodity Insurance Freight” price for coal with sulphur content less than 1 per cent. imported in north-west Europe; also referred to as Amsterdam-Rotterdam-Antwerp (ARA) coal price (25GJ/tonne gross calorific value).

ARA price (£/tonne)

Prices received by UK coal producers for sales to generators

2000

Q1

18.5

28.6

Q2

21.4

27.9

Q3

23.2

28.2

Q4

27.1

28.0

2001

Q1

26.9

27.6

Q2

28.1

28.6

Q3

25.4

28.6

Q4

23.1

28.4

2002

Q1

22.2

28.2

Q2

19.4

28.4

Q3

16.9

27.5

Q4

20.8

27.1

2003

Q1

20.8

26.7

Q2

20.3

25.8

Q3

25.4

25.7

Q4

33.6

25.3

2004

Q1

35.0

25.7

Q2

36.2

27.6

Q3

39.6

27.4

Q4

38.3

26.8

2005

Q1

33.5

26.8

Q2

32.8

29.6

Q3

31.8

30.0

Q4

28.7

30.0

Source: DTI.

To ask the Secretary of State for Trade and Industry what assessment he has made of the capacity of the existing rail network to transport an increased supply of imported coal in the future. (74709)

I have been asked to reply.

Network Rail is currently undertaking Route Utilisation Strategies (RUS). The Freight RUS will be based on forecasts by the rail freight industry. All RUSs seek to balance capacity, passenger and freight demand, operational performance and cost. The RUSs will form the basis for the development and delivery of timetables, infrastructure and renewals of the network. Network Rail expects the draft Freight RUS to be published for consultation in September this year.