Low prices are compounded by soaring transportation costs for Russian coal producers, limited railway capacity to the East, import tariffs introduced by China in January 2024 (3% for coking coal and 6% for thermal coal), among other factors. It’s telling that “friendly” China introduced these tariffs exclusively against Russia, further undermining the competitiveness of Russian coal.
Russia stubbornly bets on coal
Europe’s rejection of Russian coal can hardly be called sudden. True, no one expected it to happen as early as 2022 — when Russia’s invasion left Western former buyers little choice — but it had been clear since at least the 2010s that the role of coal in the EU economy was destined to diminish. By the 2020s, it was increasingly obvious that a coal demand decline was also looming in Asia.
For instance, in 2014 the EU set a goal of cutting greenhouse gas emissions 40% by 2030 (compared to 1990 levels), and in 2020, this goal was raised to 55%. Achieving it would require improving energy efficiency and expanding renewable energy use, with the projected share of renewables in electricity production set to rise from 32% in 2019 to 65% by 2030. According to Ember data, by 2024 the EU’s renewables share had reached 47.5%, while coal’s share fell from 30% in 2000 to 10% in 2024. Given these numbers, the EU seems well on track to meet its targets (at least when it comes to renewables).
Currently, China accounts for 80% of all coal power capacity under construction worldwide, with India responsible for another 12%. However, China produces a large amount of coal domestically and mainly uses it to meet its own needs. And even there, the China National Coal Association expects the country’s coal consumption to peak by 2028.
For decades, China has been actively developing renewables and is now the global leader in this sector, particularly when it comes to producing solar and wind energy equipment , as well as energy storage systems and electric vehicles (EVs). China is also aggressively rolling out energy transition technologies at home. The combined share of solar and wind energy in China’s electricity production surpassed 18% in 2024 — in Russia, it remains below 1%. Meanwhile, coal’s share in Chinese electricity production fell from 78% in 2000 to 58% in 2024.
Even before the pandemic, as major EU countries were adopting plans to phase out coal, Russia continued modernizing old terminals and building new facilities at ports near St. Petersburg and Murmansk in order to keep supplying coal to Europe. Russian coal producers simply did not believe Europe’s phase-out was real.
