Europe Asking Russia for More Coal Is Set for Disappointment - Bloomberg

Updated: Oct 7, 2021

Anna Shiryaevskaya and Yuliya Fedorinova expose the ultimate irony of Europe requesting additional coal reserves this coming winter in order to stave off any impending energy crisis now looming on the horizon. What is worse, the coal required comes from Russia, making Europe doubly dependent on Russia for its future energy, with the NordStream 2 gas pipeline now completed and tests currently underway.


More worryingly, stocks of available coal are low, with the majority now heading for Asia after Europe largely turned its back on coal-backed thermal power stations. The dilemmas are acute, with the COP26 summit only weeks away:


"Power producers in the continent are being forced to ask Russia for more coal to ease an energy crunch with winter approaching and record-high gas prices denting profitability, according to officials at two Russian coal companies. But they may be left stranded as any increase in exports from the country won’t be substantial, they said.


Having largely turned away from coal for years in an attempt to green its electricity generation, Europe is now in a conundrum. The region’s gas storage sites are only partially full, liquefied natural gas suppliers are favoring Asia, and intermittent renewables aren’t able to fully meet demand. With the winter heating season approaching, the dependence on Russia to keep the lights on is growing.


“If all the European utilities switch to coal, it will result in a huge spike in coal demand that Russia alone cannot provide for on such a short notice,” said Natasha Tyrina, a principal research analyst at Wood Mackenzie Ltd. in Houston. “That would need supply from other countries as well, from the U.S. for example, but the situation there is similar to everywhere else.”


Europe’s plight highlights the energy supply crisis that’s gripping the world as countries emerge from the pandemic. Demand for oil, gas and electricity is surging, while coal is making a comeback, driven in part by China. The fuel’s resurgence, and countries’ recent dependence on it to keep their economies running, makes critical climate talks much more complicated with the COP26 meeting just weeks away."


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