Winter blackout fears trigger dash for coal
EUROPEAN countries have launched a new dash for coal amid a battle to keep the lights on in the wake of Russia’s invasion of Ukraine.
The Netherlands yesterday joined Britain and Germany in warning that it will have to use more of the dirtiest fossil fuel this winter to stave off a looming energy shortage.
The move risks opening up a split between European Union member states and Brussels, which is committed to the green transition.
Ursula von der Leyen, president of the European Commission, told the Financial Times that governments must stay focused on “massive investment in renewables”.
She added: “We have to make sure that we use this crisis to move forward and not to have a backsliding on the dirty fossil fuels.”
The price of coal has surged since Feb 24 as Russian supplies of both coal and gas are shunned, leaving power generators competing for supplies from elsewhere.
There are growing fears that Russia’s gas will be cut off, adding further to demand and raising the prospect of blackouts or energy rationing on the Continent.
Deirdre Michie, head of the lobby group Offshore Energies UK, said yesterday that the risk of shortages was real. Speaking at an event in the House of Commons, she said the transition away from fossil fuels will take time and added: “We could be living through the reality of not getting this right as soon as this winter, if the concerns being raised about blackouts and shortages come to pass.”
The price of coal delivered to northern Europe has reached record highs of $335 [£273] per tonne, compared with averages of around $80 pre-pandemic.
Myles Allsop, an analyst at UBS, predicted prices could stay high for one to two years. Turmoil in gas markets is pushing up gas prices and therefore demand for coal as an alternative.
He said: “Coal prices will start to correct when the gas markets start to normalise. It’s very difficult to gauge how high coal prices will be.
“What you can say with some degree of confidence is there is no quick solution to the gas market. Gas prices are going to stay elevated, the coal price is going to stay elevated, probably for one to two years.”