Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Europe’s looming coal crisis

Europe’s looming coal crisis

A shortfall of the fuel would be particularly painful for Poland and Germany.

Move over gas — there’s a new energy shortage in town.

As Europe faces its worst energy crunch in decades amid the war in Ukraine, national capitals have been scrambling to shore up their gas reserves ahead of the winter. But another fuel could also soon be in short supply: coal.

Although the highly polluting fuel has earned pariah status as the EU looks to slash emissions, consumption is on the rise as a number of countries, including Austria and the Netherlands, either switch old coal-fired plants back on or boost existing capacity to save on gas.

The problem is that the EU will soon be deprived of its biggest supplier: The bloc slapped sanctions on Russian coal in April, forbidding further imports starting August 10.

That means the 2 million tons of coal it is set to receive from Russia this month will be the last such shipment, said Alex Thackrah, a senior coal analyst at the market intelligence firm Argus Media.

Add to that serious logistical challenges in sourcing and transporting the fuel from elsewhere, and "it's certainly going to be a challenge to get enough coal this winter," he said.

Indonesia, South Africa and Colombia are all potential suppliers, but EU countries will face "extremely high prices" due to the particularly high-calorific type of coal normally used across the bloc, according to Thackrah. Coal prices on the API2 Rotterdam hub, a European benchmark, hit $380 per ton last week, already a more than fourfold increase on this time last year.

The EU will also face "stiff competition" from players such as India and South Korea, which have existing coal supply agreements with many of these countries, said Mark Nugent, an analyst at the shipbroker Braemar.

Logistical issues risk complicating matters further.

Much of the EU’s coal — which arrives via ports in Amsterdam, Rotterdam and Antwerp — travels along the Rhine river by barge. Uncharacteristically high temperatures this month have lowered the river's water levels to 65 centimeters, reducing how much cargo barges can carry by two-thirds, said Thackrah.

Although power plants typically have their own stockyards, coal that can't be delivered to them is typically stored in ports to await further transport, but "inventories at European ports are nearing maximum levels," said Nugent.

According to data from coal trade association Euracoal, shared with POLITICO, some 8 million tons of coal are currently stuck in ports.


Bracing for blowback


Supply bottlenecks and shortfalls are likely to be felt most intensely in Poland and Germany.

A shortage in Germany — which made up 37 percent of the EU’s total hard coal and lignite consumption last year — would be particularly painful for the steel and chemicals industries, said Rudolf Juchelka, professor of economic geography at the University Duisburg-Essen. Power generation would also be affected, but to a lesser extent.

Juchelka also warned that the government could be forced to implement stricter energy rationing measures if Russia shuts off gas supplies or logistical issues continue to snarl up coal deliveries. “If those [effects] come together … into one big effect, there will be problems,” he said.

A spokesperson for Germany’s climate ministry said power plant operators have “assured” lawmakers they have enough coal stored up to make up for the lost Russian coal. The government has also brought in a new regulation that aims to "prioritize energy shipments” over other types of deliveries “to be prepared” in the event of a crisis, the spokesperson added.

In Poland, meanwhile, the government is engulfed in a political scandal over its failure to build up the country's coal reserves.

Some 2 million households in Poland still rely on hard coal for heating, with each burning an average of three tons per winter, according to Robert Tomaszewski, a senior energy analyst at the Polityka Insight think tank. Before the war in Ukraine, the country imported around 7 million tons of coal annually from Russia for this purpose.

With the EU's ban on Russian coal set to kick in next month, there is a now “a very huge risk that there will be not enough coal for some households,” he said, estimating that Poland will find itself short between 1 million and 2 million tons of coal over the winter.

The EU slapped sanctions on coal imports from Russia, the bloc's top supplier


According to an investigation by the Polish news outlet Onet, Prime Minister Mateusz Morawiecki was warned by his own Cabinet in early March that sanctioning Russian coal could result in a massive shortfall and was urged to set up a new strategic coal reserve. But he did not act on the warning, nor did his government carry out a formal impact assessment of the EU's proposed coal sanctions before voting in favor of them, Onet reported.

In an effort to calm the waters, Morawiecki last week announced that affected households would receive a 3,000 złoty (€631) “carbon allowance” to help buy coal, and ordered state-owned coal companies to buy 4.5 million tons of coal by August 31.

But getting these coal purchases to homes in time will be “probably impossible,” said Tomaszewski — and if supplies are low, giving money to households will achieve little.

Poland's Energy Minister Anna Moskwa admitted Friday in an interview that the government "face[s] a difficult task" in overcoming logistical issues with deliveries. But she insisted it was "not true" there would not be enough coal for the winter, citing new contracts under negotiation.

A spokesperson for the Polish climate ministry said it was working on "multidirectional solutions" to the coal issue and had introduced a new regulation that "temporarily suspends the existing quality requirements" for some types of coal sold on the market for households uses for 60 days to increase its availability.

Beyond the looming problem of this winter, a potential coal shortage could also cause trouble for the conservative government during next year's parliamentary elections, Tomaszewski warned, particularly as new polls show for the first time since 2015 that the ruling party could be unseated.

Morawiecki's “political mistake,” he said, could end up "hurting him very much politically."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Russia’s A7 Builds a State-Linked Payments Network Beyond Western Sanctions
AI’s Next Bottleneck Is Power, Not Just Nvidia Chips
Meta Raises AI Spending Target to as Much as $145bn Despite Pressure Over Returns
Danube Drought Exposes Nazi Wrecks and Pushes Central Europe’s Power System to the Brink
Joe Biden’s Cancer Has Spread Beyond His Bones, Hunter Biden Says
Why 2027 Could Be a Strong Year for Stocks—and Why the Forecast Is Fragile
Why Markets May Look Quiet in August After Big Tech Earnings
UK Drought Cuts Harvests and Raises Food-Security Fears
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Senate Scrutinises AI-Driven Personalised Pricing
Spain Seeks Mainland Transfers for 1,100 Children Stranded in Ceuta
Spain and Morocco Trade Blame After 72,000 Migrants Enter Ceuta
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Europe’s Heat and Drought Are Now Disrupting Power, Shipping and Tourism
Europe’s Drying Rivers Trigger Power Cuts, Factory Shutdowns and Wildfire Emergencies
Record-Low Danube Forces Nuclear Cuts and Emergency Power Curbs
Danube Drought Forces Hungary’s Paks Nuclear Plant Into Full Shutdown
Ceuta Death Toll Rises as Spain and Europe Clash Over Border Response
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Massive Wildfires Ravage Southern Europe: Fatalities in Greece and Evacuations Across France, Spain, and Turkey
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Apple Briefly Crosses Five Trillion Dollar Valuation as Investors Retreat From AI Bets
Fresh Heatwave Threatens to Rekindle France’s Historic Wildfire Crisis
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
×