The European energy crisis continues to dominate headlines and conversations throughout the coal and energy industries. We have now reached the point in time where predictions and forecasts of renewed demand, made over three months ago, are now coming to pass in real time. Indeed, recent reports from the BBC, Euronews, Reuters, Sky, The Washington Post, etc., have confirmed that several European countries are now turning to coal to meet their respective energy demands.
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Of these countries, Germany has made one of the highest profile transitions back to coal, as it looks to re-balance its energy mix as part of EU-wide efforts to implement a strategy to reduce imports of Russian gas by two-thirds within a year – in response to the invasion of Ukraine.1 This action, in addition to Russia counter-action – namely the recent, sudden cuts to export volumes to Europe via the Nord Stream 1 pipeline – have created significant shortfalls in crucial gas supplies in Europe.2 These shortfalls have come at a time when stockpiles are usually built up in preparation for the spike in seasonal heating demand in winter, prompting concerns about a winter gas shortage and accusations of “very rogue moves” being made by the Putin administration.2 This, according to Robert Habeck (Germany’s Vice Chancellor, Federal Minister for Economic Affairs and Climate Action), has created a situation in which the German government has been forced to burn more coal for a “transitional period”.Habeck added, “[It’s] bitter, but it’s simply necessary in this situation to lower gas usage”.3
Despite the need to broadly reintroduce coal into the European energy mix being accepted by governments across the continent as a necessity at this time, predictably, there has been a lot of pushback and concern regarding the impact on progress towards climate goals. 4 As can be noted from the words of Habeck, as well as those of the German Chancellor, Olaf Scholz, quoted in a recent Deutsche Welle article, the message being pitched to assuage dissent has focused on the turn to coal being ‘transitional’ and ‘temporary’.3,5 Nevertheless, truly how temporary the situation is remains to be seen.
Right now, the market news is at least encouraging for the coal industry. Coal prices have seen a spike since Russia’s invasion of Ukraine began, and have subsequently remained on an upward trajectory – a trend which looks set to continue for the foreseeable future, as reported by Rystad Energy: “the prospect of additional demand from German coal-power restarts is certain to push imported coal prices beyond their current super-high levels.”6 Furthermore, with a ban on Russian coal imports looming, Bloomberg projects that thermal coal prices will remain well supported for 2022, and well into 2023 – maintaining levels that are already breaking records.7,8
While the energy industry has its eyes on Europe, we at World Coal have not forgotten coal is global. Make sure to read our latest regional report by Fitch Solutions to get the latest news from Asia and Australia. Also, check out our new range of technical articles, especially those from THIELE and Komatsu who return to our pages to share the latest insights into longwall mining chains and shovel, excavator, and dragline technology.
I hope you enjoy this new issue of World Coal. Make sure to pick up a hard copy if you are attending Electra Mining Africa, EXPO Katowice, or The Bluefield Coal & Mining Show.
- HORTON, J., and PALUMBO, D., ‘Russia sanctions: Can the world cope without its oil and gas?’, BBC, (11 July 2022).
- BROWNING, N., and BULI, N., ‘EU signals shift to coal, accuses Russia of ‘rogue moves’ on gas’, Reuters, (22 June 2022).
- SEABROOK, V., ‘‘Bitter but necessary’: Germany turns to coal to replace Russian gas’, Sky News, (19 June 2022).
- LORY, G., ‘Austria to reopen closed coal-fired power station, despite climate goals’, Euronews, (29 June 2022).
- ‘Germany’s Scholz says switch back to coal and oil ‘temporary’‘, Deutsche Welle, (16 July 2022).
- ‘Europe’s power pain arrives earlier than expected with limited options in gas, LNG, coal, nuclear and renewables’, Rystad Energy, (18 July 2022).
- STRINGER, D., ‘Russia Ban Seen Tightening Coal Market That’s Already Surging’, Bloomberg UK, (18 July 2022).
- STAPCZYNSKI, S., ‘Asia Coal Prices Hit Record on Hot Global Competition for Fuel’, Bloomberg UK, (27 June 2022).