Europe may need to return to coal as Russia reduces gas flows

Europe’s largest Russian gas buyers raced to find alternatives on Monday. They could burn more coal in order to manage reduced gas flows from Russia. This could create an energy crisis in winter, if the stores are not replenished.

Germany, Italy, Austria, and the Netherlands all signaled that coal-fired power plant could be a solution to the crisis in Europe that has caused gas prices to surge and increased the difficulty for policy-makers trying to combat inflation.

• Have a question? Send an email to [email protected], or join us live in our comments.

Eni in Italy saidGazprom in Russia informed it that it would only receive a portion of its request for gas supplies Monday. This pushes the country closer towards declaring a state-of-alert that will trigger gas saving measures.

Germany, which has also seen lower Russian flows, announced Sunday its latest plan for increasing gas storage levels. saidIt could restart coal-fired power stations that it had planned to phase out.

“This is not an easy task, but it is necessary in this environment to reduce gas consumption.” saidRobert Habeck is the economy minister and a member of Green party. He has advocated for a faster exit coal, which emits more greenhouse gases.

“But if we don’t do it, then we run the risk that the storage facilities will not be full enough at the end of the year toward the winter season. Then we become politically blackmailed.”

Russia on Monday repeated its earlier criticism that Europe had only itself to blame after the West imposed sanctions in response to Moscow’s invasion of Ukraine, which is a gas transit route to Europe as well as a major wheat exporter.

The Dutch front-month gas contract, the European benchmark, was trading around 124 euros ($170 Cdn) per megawatt hour (MWh) on Monday, down from this year’s peak of 335 euros ($458 Cdn) but still up more than 300 per cent on its level a year ago, before prices started rocketing.

Slowly filling inventories

Markus Krebber is the chief executive of RWE Germany’s largest power producer. saidIt could take up to five years for power prices to drop back to their lowest levels.

Russian gas flows to Germany through the Nord Stream 1 pipeline, the main route supplying Europe’s biggest economy, were still running at about 40 per cent of capacity on Monday, even though they had edged up from the start of last week.

Ukraine saidIts pipelines could be used to fill any supply gaps via Nord Stream 1. Moscow has previously saidIt could not pump more through pipelines that Ukraine had not shut off.

Eni and German utility Uniper were just two of the European companies. saidThey were receiving less Russian gas than contracted volumes, even though Europe’s gas reserves are still being filled, albeit slower.

They were about 54 per cent full on Monday against a European Union target of 80 per cent by October and 90 per cent by November.

Germany’s economy ministry saidIn the event of gas shortages, bringing back coal-fired power stations could increase their capacity by up to 10 gigawatts. A law relating to the move will be submitted to the upper house on July 8.

In addition to a return to coal, the German government has announced that it will be launching an auction system in the coming weeks to encourage less consumption and provide financial support to Germany’s gas market operator through KfW. This will allow them to fill their gas storage facilities quicker.

RWE saidIt could extend the operation, if necessary, of three 300 megawatt (MW), brown coke power plants if necessary during the gas supply crisis.

Russia accuses West

Austria’s government partnered with Verbund to convert a coal-fired power plant from gas to use coal in case of energy emergency. OMV saidMonday was the day Austria would receive half of the usual gas for a second consecutive day.

Dutch broadcaster NOS reported Monday that the Netherlands would allow coal-fired power plants to increase production in order to reduce dependence on Russian gas. The announcement by the Dutch energy minister about gas supplies was scheduled for 1530 GMT.

Russia’s Gazprom, a Russian state-controlled corporation, reduced capacity along Nord Stream 1 last Wednesday. The major pipeline supplies Germany and other countries. Gazprom cited the delayed return equipment that was being serviced in Canada by Siemens Energy.

Dmitry Peskov, a Kremlin spokesperson, said that while we have gas, it is ready for delivery. However, the Europeans must return the equipment. They should also repair the equipment under their obligations. said.

German and Italian officials are involved. saidRussia used this excuse to reduce its supplies.

Italy’s technical committee on gas has already met. saidIt could declare an increased state of alert on gas for this week if Russia continues its supply cuts.

This would set off measures to reduce consumption. It would include rationing gas for select industrial users, increasing coal power plant production, and asking for additional gas imports from other suppliers in accordance with existing contracts.