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IEAPER/32

Coal Sulphur Content--Impact on Coal Markets

AUTHOR: Paul Baruya and Alessandra McConville
DATE: March 1997
PAGES: 49

ABSTRACT:
This report considers the factors contributing to the competitiveness between coals with different sulphur contents. The most prominent drivers of competition include regulation of sulphur emissions and changing industry structures, most notably in the power industry. Over the years, legislation about sulphur dioxide (SO2) emissions and commercial factors are forcing more utilities worldwide to seek lower-sulphur coals, despite the control measures already adopted. consequently, on the international coal market, price differentials have formed between coals with different sulphur contents. In some markets, however, price premiums for low-sulphur are distorted, or even eliminated.

This report separates the world market into sectors of coal producing (and non-producing) importers and coal producing exporters. Sulphur legislation and current technologies for sulphur control are described. The potential demand for high- and low-sulphur coal is assessed for selected countries in each market sector listed above. Among the coal producing countries, the sourcing and production of low-sulphur coal is discussed. Recent price premiums are discussed and compared with premiums for low-sulphur coal in the past. Also, the emission trading system (operating in the United States) and its relationship with price premiums is reviewed.