Europe

In Western Europe, coal production is concentrated, with the United Kingdom and Germany accounting for roughly four-fifths of total production and Spain and France accounting for most of the remainder. Until recently, European coal producers benefitted from protected markets and from an extraordinary array of generous subsidies, allowing European coal mines, which had become vastly inefficient by world standards, to remain in operation. In Germany, for instance, subsidies have until recently been financed by a 7.5-percent levy on electricity bills. As a consequence, domestic coal prices in Germany have been more than three times the import price {see Endnote 290}.

In turn, electricity prices in Germany are the most expensive in Europe, and 70 percent more costly than in the United States {see Endnote 291}. However, the German coal industry has been shrinking in recent years in order to comply with European Union mandates and to remain competitive in a global market place.

The restructuring of Europe's coal industry is also due in part to a shift to alternative fuels. The proportion of Western Europe's energy consumption fueled by coal fell from around 80 percent in the 1950's to 25 percent in 1994. In the future, European utilities are expected to move toward greater usage of increasingly available North Sea natural gas and away from coal.

As a result of the continued elimination of coal subsidies and shift toward natural gas, the European coal industry has been declining. In 1994, coal production in the United Kingdom declined by over 60 percent from its 1980 level, while Germany experienced a decline of almost 40 percent in hard coal production. The larger reduction in coal output in the United Kingdom was in part due to the more forceful elimination of subsidies undertaken by the British government. Germany has been behind schedule in doing away with coal subsidies. For OECD Europe, hard coal production is expected to fall from 187 million metric tons in 1992 to 80 million metric tons in 2010 {see Endnote 292}.

In contrast to Europe, U.S. coal production peaked in 1994, surpassing 1 billion short tons for the second time in history. U.S. production in 1994 was 25 percent larger than in 1980. Further, in future years, the United States is expected to increase its coal output. Other countries expected to boost coal production and exports in future years include the largest and the third largest coal exporters, Australia and South Africa. Recent entrants into the global coal trade include Colombia and Venezuela.

Interestingly, with the exception of South Africa, all of the aforementioned nation's coal industries have seen increasing levels of foreign direct investment from a handful of multinational conglomerates.