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Europe is drawing up emergency plans to switch back to coal after Russia cuts natural-gas supplies

Business Insider US
Kremlin spokesman Dmitry Peskov said Russia's gas supply cuts are not politically motivated.
  • The Netherlands and Denmark triggered emergency energy plans on Monday.
  • Germany, Italy, the Netherlands, and Austria signaled a shift to coal as an emergency fuel.
  • Europe is racing to secure alternative fuel supplies ahead of winter as Russia has cut gas supplies.
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European countries have triggered emergency plans that could lead to rationing of natural gas and signaled a shift back to coal-fired power as the continent's largest buyers of Russian fuel seek to secure their energy supplies.

Russian state gas giant Gazprom cut natural-gas supplies via the Nord Stream pipeline to Germany — which also goes to the rest of Europe — by more than half since last week, citing an equipment hold-up in Canada as a result of sanctions over the Ukraine war.

Germany's Habeck and Italian Prime Minister Mario Draghi said last week Gazprom's move was "politically motivated," but Moscow insists it's technical. "We have gas, it is ready to be delivered, but the Europeans must give back the equipment, which should be repaired under their obligations," said Kremlin spokesman Dmitry Peskov on Monday, Reuters reported.

The European Union relies on Russia for roughly 40% of its natural gas and, despite lining up a ban on imports of oil and coal, it has not made any decisions to limit gas purchases.

On Monday, the Netherlands and Denmark said they were working on emergency plans to deal with disruptions to energy supplies.

In the Netherlands, authorities will plan for and alert the public if gas supplies get tight, although it was not clear how gas would be rationed in the event of a real shortage, Reuters reported. 

Meanwhile, Denmark's energy agency said in a press release that if the situation escalates, natural gas would be rationed and limited to some industrial users so consumers could have winter heating.

Italy's considering declaring a state of alert on energy after Russia's deliveries to energy giant Eni fell short of what it had requested for a sixth day on Monday, Reuters reported, citing two government sources. Under a state of alert, Italy could start rationing gas to industrial users.

Germany and Austria have already triggered emergency plans that could eventually lead to gas rationing.

Coal-generated power as backup

Europe's in the thick of a summer heatwave now, driving up natural-gas demand for cooling systems. Russia's decision to choke off supply raises questions about how the region can prepare for the crucial winter months, when consumption is far higher.

The price of coal for delivery in Europe has risen by 152% this year, compared with a 75% rise in the price of gas.

On Monday, Germany, Austria, and the Netherlands indicated coal-generated power could help them weather an energy crisis this coming winter. It is also at odds with their commitment to cut back on the use of coal — the most carbon-intensive fossil fuel — and their plans to phase out coal-fired plants by 2038. 

Germany's Habeck said the country said it took a "bitter" decision to restart idle coal power plants but it was a "sheer necessity" to cut gas use, per Reuters.

"But if we don't do it, then we run the risk that the storage facilities will not be full enough at the end of the year towards the winter season. And then we are blackmailable on a political level," he said, according to the news agency.

Austria — which shut its last coal-fired power plant in 2020 — said it's converting a gas-fired power plant to run on coal in case of emergencies. Netherlands removed its limit on coal-generated energy production, per Reuters.

Meanwhile, Italy's coal-fired power plants have been hoarding coal in the last few months, Reuters reported last week, citing an industrial source.

European Commission president Ursula von der Leyen said EU countries need to stay focussed on renewable energy even amid the natural-gas crisis.

"We have to make sure that we use this crisis to move forward and not to have a backsliding on the dirty fossil fuels," von der Leyen told the Financial Times on Monday.



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