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EU states turns to coal power amid worries over Russian gas supply cut
With a potential halt of Russian natural gas supplies to Europe this winter, several EU member states have prepared to increase coal power generation despite concerns over a short-term boost to emissions.
Germany and France are among the European countries temporarily delaying the scheduled closures of some coal-fired power plants, readying themselves for less electricity generated from gas-fired facilities.
The strategy signals that the EU is preparing to burn less gas in its power system and reroute the supplies into storage tanks over energy security worries, according to analysts.
"Keeping thermal plants online in the short term is imperative to ensure that gas-fired production is reduced," S&P Global Commodity Insights Senior Analyst Giovanni Giansiracusa told Net-Zero Business Daily.
Based on the announced plans of Germany, Austria, France and the Netherlands, thinktank Ember estimates 13.5 GW of coal-fired power generation capacity has been placed on standby in Europe.
This is equivalent to 12% of the EU's existing coal-fired capacity, and 1.5% of its total installed capacity when all power sources are taken into account, according to Ember's figures.
Much of the capacity is in Germany, Europe's largest economy, whose parliament earlier this month passed a new energy law to deploy 8.2 GW of coal plants as supply reserves—including 6.3 GW running on hard coal and 1.9 GW on lignite.
The Netherlands has permitted its hard coal plants with a total capacity of 4.5 GW to operate at full until the end of 2023, instead of 35% previously.
France plans to reopen its 595-MW Emile Huchet 6 for this winter, while Austria will temporarily bring a 246-MW coal unit out of retirement at its Mellach power station.
"Several EU countries have announced plans to ensure that their gas storage facilities are filled as quickly as possible to avoid a shortage of supply over winter. To achieve this, gas currently used for electricity generation may need to be injected into storage, with electricity produced by burning coal instead," Ember Senior Analyst Sarah Brown said in a report last week.
The governments' plans could lead to more emissions in the short run with more use of coal, the most carbon-intensive fuel.
If those power generators on standby end up running at 65% of their capacity next year, they will generate 60 TWh and emit 30 million metric tons of CO2, according to Ember.
This amount of CO2 represents 1.3% of the EU's total emissions and 4% of its power-sector emissions in 2021.
With Europe's power demand likely to be negatively affected by inflation and an economic downturn, Giansiracusa said emissions won't necessarily increase even if the coal plants are operating.
"Demand is supposed to decrease—compared to the pre-war outlook—in the short term and this could lead, overall, to a reduction of the emissions from the power sector," he added. "The demand destruction will play a key role, especially if gas prices keep rising."
While keeping coal-fired capacity available in case of near-term emergency, European countries have maintained their climate targets for 2030 and 2050 and not pushed back their coal phaseout dates.
But Mia Moisio, a policy analyst at thinktank New Climate Institute, warned that operating the plants would increase climate risks. Europe's current climate action is already insufficient to help cap global warming at 1.5 degrees Celsius above pre-industrial levels, she said.
"Aside from governments relying on coal … there are many underused, fast, climate-friendly policy options to address the current energy crisis, particularly when it comes to energy efficiency and demand-side response measures," Moisio said. "Energy saving needs to become a cornerstone of all energy-related decisions in the EU."
Russian supply cut
Russia's gas flow to the EU has fallen from a post-invasion peak of almost 350 million cubic meters (mcm) per day to below 100 mcm/day currently, according to the International Energy Agency (IEA).
Volumes through the key Nord Stream pipeline to Germany were reduced to just 40% of capacity in mid-June, ostensibly due to sanctions-related issues with the return of a turbine that had been sent to Canada for refurbishment. Russia then halted flows through Nord Stream altogether on July 11 for planned maintenance that was scheduled to end on 21 July, but amid the heightened geopolitical tensions, the market is closely watching to see if it returns on time, and at what level.
If Russia cuts off gas supplies to Europe completely at the start of the winter heating season, IEA Executive Director Fatih Birol said the EU would need fill its gas storage facilities to above 90% of their capacity by 1 October. This calls for gas savings of 12 billion cm in the coming three months, according to IEA estimates.
On the Paris-based energy watchdog's website, Birol said the EU can temporarily increase coal- and oil-fired power generation to reduce gas use in the power sector while accelerating deployment of low-carbon sources.
But he stressed that measures including lowering household electricity demand, harmonizing emergency planning, and enhancing coordination among gas and electricity operators across Europe will also be necessary.
"If these types of measures are not implemented now, Europe will be in an extremely vulnerable position and could well face much more drastic cuts and curtailments later on," Birol said in a commentary piece 18 July.
Between 2017 and 2021, the EU and the UK together consumed 464 billion cbm/year of gas and imported 156 billion cbm/year from Russia, according to S&P Global's ENR estimates.
European countries can reduce gas consumption by at least 1.7 billion cbm between the fourth quarter of 2021 and the first quarter of 2022 if they opt to operate the coal plants currently on standby, Giansiracusa said, whose analysis is based on their announced plans as of mid-June.
"The replaced power generation … represents a small amount of gas if compared" to total consumption, he added.
Aside from the power sector, buildings and industrial consumption account for the largest proportions of European gas demand—and some believe those are where policymakers should focus on.
"Energy savings in industry and heating should be prioritized and paid for, vulnerable households should be prioritized for energy efficiency measures to reduce their bills," thinktank E3G Policy Advisor Ysanne Choksey said.
"There is a lot to gain from efficiency measures and electrification of industry buildings' energy use alone," Choksey told Net-Zero Business Daily.
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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