Sergey Kondratiev, Deputy Head of the Economic Department of the Institute for Energy and Finance, commented to Vzglyad.ru on the consequences of Europe's refusal of Russian coal.
Gas and coal are interchangeable hydrocarbons, so the aggravation of the shortage of gas in the market has led to a sharp increase in demand for coal.
“I believe that when Europe planned a delayed embargo, they saw the energy situation differently. It is unlikely that they expected that gas supplies would be sharply reduced - both through the Ukrainian GTS, and through Poland, and through Nord Stream 1. This seriously influenced the change in the situation in the European power industry,” Sergey Kondratiev says.
But it was not only Ukraine, Poland and Canada, which played an important role in reducing gas exports from Russia, that spoiled the situation for Europe, but also the weather. “The drought that we see this summer in Europe has also brought down all the plans of large European generators and national governments,” the expert points out.
The drought has led to a low water content of the rivers, which is why both hydroelectric power plants and nuclear power plants began to generate less electricity. Nuclear power plants because they cannot cool the equipment.
According to him, the only thing with which Europe was “lucky” this season is that China has seriously increased coal production since the beginning of this year and therefore reduced imports. Because if China now continued to sweep away almost any coal from the market, as it did last year, then coal prices would become completely sky-high (as in the gas market). Europe now has the opportunity to find coal on the world market, in the same Africa and Asia.
However, the coal embargo, coupled with the situation on the market, has exposed many problems in the European energy sector, Sergey Kondratiev says.
“I think that not only this winter, but also in the next three to five years, Europe will be forced to seriously increase coal consumption. This growth will be tens of percent. This means that literally all the stations that exist will need to be reactivated. Perhaps surprising solutions await us - the Europeans will even start building new coal-fired power plants. Decarbonization could suddenly turn into a new coal era. But even without the construction of new facilities, a lot of work remains to be done,” the source concludes.
Subscribe for updates
and be the first to know about new publications