On April 7, after days of wrangling, the 27 EU governments agreed to ban the import of Russian coal and other solid fossil fuels from August 10, 2022. Until then, no new contracts cannot be signed. This is the first time the EU has touched on energy supplies in its sanctions against Russia for the invasion of Ukraine and follows reports of atrocities committed by Russian soldiers in the region of kyiv.

Russia is Europe’s biggest supplier of thermal coal – the type used in power stations – and supplies Germany with more than half of its supplies. EU hard coal imports from Russia have increased from 7% of coal imports in 1990 to 54% in 2020. While at first glance this may give the impression that a ban on Russian coal imports is important, the reality is that it is a high percentage of a small number. .

The EU has slowly phased out solid fossil fuels over the past three decades, reducing coal consumption from 1,200 million tonnes (mt) in 1990 to 427 mt in 2020. Consumption and production have fallen, the second highest quickly than the first. This has resulted in an increase in coal imports from 30% of consumption in 1990 to 60% today for thermal coal. But coal now accounts for only 13% of EU electricity production, far less than the 38% generated by renewables. Coal use has halved since 2015, while renewable energy use has doubled.

One small step

“At the end of the day, it’s not that bad,” says Simone Tagliapietra, senior researcher at Brussels think tank Bruegel. “Every day we pay Russia about 15 million euros for coal, while we pay 850 million euros for oil and gas. This is a first step and it is the easiest to take.

“Of the three fossil fuels that we import from Russia, coal is the easiest to replace because it is a simple commodity,” he adds. “If we don’t get it from Russia, we will do it in a few months entirely [switch] our imports – without major disruption to our supply chains – to other countries around the world that have spare capacity.

The announcement of the ban, however, caused the price of coal to soar around the world, a price that was already rising along with gas prices (which have quadrupled over the past year). Coal prices in northwestern Europe hit their highest level in a month on April 6, raising fears of a domino effect on the prices of other raw materials. These prices are unlikely to drop any time soon as supply is now tighter than ever. The world’s two largest coal-consuming economies – China and India – have recently increased their consumption of coal as soaring natural gas prices have encouraged the use of coal for power generation. The world’s major coal producers – Indonesia, Australia, Russia, Colombia, South Africa and the United States – are struggling to meet demand, even though they have the capacity to increase their production.

However, Tagliapietra says he believes this is all short term. “Of course, the coal market is a bit stretched, so there are already price implications, but it’s not something that big. We have to put things in perspective here.

Other experts agree. “The coal price hike resulting from the embargo should be rather short-lived,” said Karen Pittel of the Munich think tank ifo Institute, calling it “temporarily unpleasant but tolerable” for the German economy, among the hardest hit. . There are stocks of coal, unlike gas, she notes, and locally mined lignite (“brown” coal which is more polluting) can replace hard coal in electricity production. Russia will likely seek other buyers for its coal, which will lower the market price in the longer term. The German Coal Importers Association (VDKi) said Russian coal could be replaced within months. According to Bruegel, there are 2.6 million tonnes of coal stored in EU ports, which would cover around three weeks of Russian imports. And there is still coal stored in power plants.

More coal in the short term

The ban on coal, coupled with soaring prices, would apparently discourage the use of coal. But in fact, coal use has increased due to high gas prices, and this growth has shown no signs of slowing down. European utilities have switched from gas to coal-fired power generation. In its European Electricity Review 2022, think tank Ember reports that in the second half of 2021, coal replacing natural gas in the electricity mix was equivalent to 5% of total coal-fired electricity generation.

“What’s confusing to a lot of people is that in the next couple of years we’re probably going to see the lifespan of some coal-fired power plants extended by a few years. [to fill the gap left by Russian gas, which the EU has committed to exiting entirely by 2027]says Lauri Myllyvirta, an analyst at the research body’s Energy and Clean Air Research Center. “But the metric to look at is the rate at which we are reducing overall fossil fuel consumption. Marginal changes between coal and gas shouldn’t really be used to judge this progress. »

Much can be determined by whether the EU takes the next step and also bans Russian oil – or even oil and gas (the latter remaining unlikely due to the EU’s greater dependence on gas and the greatest difficulty in replacing it). As a solid fuel that can be loaded onto ships, coal is the easiest fossil replacement for either of these other fuels (although energy efficiency may be easier).

“A gas ban would be bullish for coal because you would be trying to get more coal in the short term,” says Myllyvirta. “But we should think of this in years, not weeks. In three years, the situation will not justify having invested in a lot of coal supply or transportation capacity.

A total ban on Russian oil and gas would likely mean the EU has to extract more coal to make up the short-term difference. Global production is accelerating in anticipation. The United States is already increasing its domestic coal production by 25 million tons (4%) in 2022 in response to the Ukrainian-Russian crisis, according to the US Energy Information Administration – even as domestic consumption is expected to fall by 7 million tons. Poland has pushed for environmental rules to be temporarily relaxed to allow the use of more readily available – but dirtier – types of coal such as lignite rather than thermal coal imported from Russia.

Across Europe, there have been announcements of a short-term coal stimulus. Italian Prime Minister Mario Draghi said shortly after the Russian invasions that “it might be necessary to reopen coal-fired power stations to cover possible shortages in the immediate future”. Greece announced last week that it was extending the operation of its coal-fired power plants from next year’s scheduled shutdown until 2028, in a move Prime Minister Kyriakos Mitsotakis called a “temporary measure”. . Germany has announced the creation of a coal reserve to secure supply and is postponing the definitive closure of certain coal-fired power stations “until further notice”, keeping them on standby for longer. The Czech Republic had planned to end coal mining by 2033, but the government is now reconsidering its decision and has already decided to delay the ban on old coal boilers for two years. Romania is temporarily restarting coal-fired power plants that had been idle. Frans Timmermans, European Commission vice-president for the Green Deal, appeared to give his blessing to all of this when he said last month that these temporary measures were not out of step with EU climate goals. “There are no taboos in this situation,” he said.

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But not all moves are temporary. Poland, which was supposed to phase out coal by 2049 – a year before it was required to do so by EU law – is now talking about extending that deadline. Deputy Prime Minister Jacek Sasin said last week that coal should be used in Poland “with a much longer perspective than until 2049”.

But Kathrin Gutmann, director of the Europe Beyond Coal campaign, believes governments will not be able to justify long-term policy changes in favor of coal – even if Russian oil and gas are banned. The Commission is unlikely to adjust the climate targets because of the war in Ukraine. “The impact of a gas ban, if you look to 2023, 2024, 2025, in creating a bull market for coal will only have been temporary. What will make all the difference is the reducing energy demand and building solar and wind power If these things are done now, coal will only have a temporary reprieve.

Long term effects

Some climate activists believe the EU banning coal without banning oil and gas shows that national leaders are still not serious about the energy transition.

“Governments’ reluctance to hit Russian oil and gas imports is proof that they are desperately trying to keep a broken energy system alive,” says Greenpeace activist Silvia Pastorelli. “Diversifying fossil fuel sources will only increase exposure to future wars and environmental destruction. Whether it’s oil from Saudi Arabia, fracking gas from the United States, or uranium from Kazakhstan, these are blood fuels that are accelerating the climate and natural crisis.

There has been particular frustration that the EU’s instinct has so far been a ‘gas for gas’ approach, rushing to strike new deals to import liquefied natural gas (LNG) to replace the Russian pipeline. . The EU’s ability to receive LNG from these new deals would require significant investment in missing infrastructure, which would risk locking up fossil fuels or tying up assets, when it could instead adopt and implement quickly the climate and energy package “Fit for 55” for the same effect.

The only thing clear at the moment is that there is a major disruption to the global energy system, and nowhere is this disruption felt more intensely than in Europe. While initial developments suggest climate policy could be in jeopardy as countries panic to buy coal, Tagliapietra says there are still strong reasons to believe this crisis will speed up climate action rather than slow it down. .

“This is, as far as energy is concerned, a fossil fuel crisis,” he says. “The reason we are in this situation is because of our overreliance on fossil fuels, so I think ultimately, in the medium to long term, Europe will emerge from this situation greener than before. “

“All this will accelerate the green transition and the implementation of the European Green Deal,” he summarizes. “After the oil crisis of the 1970s, people started using gas and electricity instead of oil.”