What will be the impacts of cutting Russian coal altogether in the European Union?

Last Wednesday (10), the ban on imports of coal from Russia came into force in the European Union, a measure that integrates the bloc’s fifth package of sanctions against Moscow over the February invasion of Ukraine.

Although the EU advertises that the veto will represent a loss of around 8 billion euros a year for the Russians, the 27 countries of the bloc will also suffer from the measure. Russia accounted for around 45% of EU coal imports (Germany, Poland and the Netherlands were the biggest buyers), according to figures from the European Commission.

Coal represents a particular challenge for the EU because, in addition to the level of fuel consumption that the countries of the bloc already had before the war in Ukraine, it is also seen as an alternative for reductions and eventual total interruption of gas supply by Russia.

The Parliament of Germany, a country that planned to eliminate the use of coal until 2030, approved in July the reactivation of coal plants that were without use.

Kerstin Andreae, president of the German Energy and Water Industries Association, told public broadcaster ARD that so-called reserve plants that use lignite (which has about 2030 % carbon) could be put into operation in “a relatively short period of time” with eastern German mine production, but those using ca electricity generation would need imports.

According to a DW report, Germany closed its last coal mine in 2018 and has since imported half of its coal from Russia. of your fuel consumption. The Association of Coal Importers estimated in June that Russian coal could be completely replaced “in a few months” by suppliers such as the United States, Colombia and South Africa.

According to data from the coal analysis service, DBX commodity markets, in the first half of 2022 Australia was the largest exporter of thermal coal and coke to ports in the Netherlands (which has two of the five largest port terminals in Europe, Rotterdam and Amsterdam) , with 8.9 million tons until June, more than the 7.7 million tons from Russia in the same period.

The volume sold by Australians is already close to the total that the country of Oceania exported 7.7 million tonnes to Dutch ports last year, a year in which the Russians exported more than 13 million tonnes of these products for Dutch terminals.

In the first half of the year, significant volumes from the United States and Colombia also arrived at Dutch ports, indicating the prospect of a substitution of Russian products.

In Poland, where the use of Russian coal was cheaper due to the costs to extract the Polish product (located at great depths), there is no prospect of its own production so soon, and that is why the country seeks to increase imports from Colombia, Australia, South Africa and Indonesia.

The Polish think tank Forum Energii pointed out that Poland consumes 87% of all coal used in households in the EU, so the government plans to offer subsidies and use its state-owned coal companies to co-finance the product for needy families.

However, with greater demand for coal, the fear is of further inflation – the price of the product is already suffering a sharp rise, pointed out Eduardo Fayet, professor of institutional and governmental relations at Universidade Presbiteriana Mackenzie.

“ The price per ton increased from US$ 40 to around US$ 70. In addition to the search for alternatives, such as Colombia, which has coal exports 13 % of its GDP, Australia and the United States, also increased the production of lignite ” described Fayet. “And there is a postponement of the closure of coal-based plants for energy security reasons, some countries had targets of up to 2023, 2025, and this is being revised.”

“Among energy sources, coal is the last option. Countries are moving in this diversification of supply, stocking up on inputs. As the supply of natural gas by Russia is also being impacted, countries are having to restructure their stocks also based on coal”, said Fayet – in this way, the participation of coal in the EU energy matrix, today around 5 %, should increase.

“Now, there will be a worsening in carbon emissions, exactly because of the use of coal, so in 2022 we will probably have a new record, but the longer-term prospects are better because Europe has accelerated the process of converting to renewable energies”, explained Fayet.

“Europe has released a plan to reduce Russia’s energy dependence to zero and launched a program for 10 strategic renewable energy, technology and innovation projects, by the European Innovation Fund, in various areas such as green hydrogen, wind, solar and geothermal energy ”, he highlighted.

Until these strategies yield significant results, however, the European Union will have some s (long) winters ahead.

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