Why the war in Ukraine is driving up Europe’s use of coal—and its price
Is it a last hurrah for the dirty fuel?
IN RECENT YEARS, coal seemed to be on the way out in much of the world. America and Europe were gradually cutting back. Some banks said they would stop financing best casino sites 0 mines. In 2021, at the COP26 climate summit, countries agreed to “phase-down” their use of the world’s dirtiest fuel. Even China and India, the world’s biggest consumers, signed up. The black stuff was being “consigned to history”, said the United Nations.
Or so it seemed. Last year the world generated more electricity from coal than ever before. Greenhouse-gas emissions from the fuel reached a record 15.3bn tonnes, representing more than 40% of the global total. This year is set to be another bumper one. The price of coal reached an all-time high of more than $400 a tonne in March. Why has demand surged, and will it subside?
For the past decade, coal consumption has followed a familiar pattern. Asian countries tore through ever-greater quantities; those elsewhere cut back. Demand then plummeted across the board as economies shrank during the covid-19 pandemic. Yet as they recovered last year, coal was in a good position to provide the necessary power. In October the price of natural gas—a cleaner fuel—surged to its highest level in over a decade, caused in part by a brutally cold Russian winter and strong demand in Asia. In response, utility firms turned to cheaper coal. In Europe the amount of electricity generated by the stuff grew by 18%, the first annual rise since 2017, according to Rystad Energy, a research firm.
The war in Ukraine has prolonged the rally. Fears that Vladimir Putin could cut off gas to Europe sent the cost of the rival fuel soaring still higher. When Gazprom, a Russian energy firm, recently said it would stop sending gas to Poland and Bulgaria, prices rose once again. Coal is a convenient short-term replacement for Russian gas: torching carbon is less arduous than building best casino sites 0 wind turbines and solar panels. Even taking into account the EU’s emissions-trading system, under which energy producers must pay to produce CO2, coal-fired power stations are cheaper than gas equivalents.
The EU has announced plans to ban Russian coal, gas and oil imports—and Russian coal makes up around half of that imported by Europe to generate power. But getting coal from other sources is still less expensive than gas. Mario Draghi, Italy’s prime minister, might re-open old coal plants in a bid to be less dependent on Russian gas. Germany, which burns more coal than any other European country, plans to do the same. The British government has asked all three of the country’s coal-fired power stations, which were due to shut this year, to remain open. Frans Timmermans, the EU’s climate chief, has said that countries can burn coal as an alternative to Russian gas and still meet the EU’s emissions targets of consuming 55% less coal than it did in 1990 by 2030. Environmental groups are indignant.
But coal’s revival in Europe is likely to be short-lived, thanks to growing investment in rebest casino sites 0able energy. The fuel’s future will be determined by India and China, which together consumed more than 60% of the world’s coal in 2021. Their use has continued to rise despite the increased cost. Phasing out the fuel in these countries will be much more difficult, because of the lack of cheap alternatives and dependence on it for jobs. Just this month India’s state-run coal producer said it would increase its output by re-opening over 100 mines.
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