Coal Stages Comeback Amid Russia-Ukraine War

Those who want to “consign coal to history” may need to wait a little longer following Russia’s invasion of Ukraine. High oil and gas prices and the need to shift supply away from Russian gas has provided a boost for coal fueled energy in key European markets.

According to data (cited by Bloomberg) from German solar research institute Fraunhofer ISA, the use of coal by power plants in Europe was up 51% over last year at this time. The demand for gas from power stations, meanwhile, declined during the same period.

In the lead up to last year’s COP26 summit, environmentalists called on world leaders to stop burning coal to mitigate some of the worst effects of climate change. Coal is a major contributor to climate change causing emissions but is difficult to phase out as it is widely available and inexpensive compared to alternatives.

At the COP26 summit, major coal-consuming countries such as Canada, Poland, Vietnam, and Chile agreed to stop building new plants. However, the biggest users of coal such as India, China and the United States are not part of that deal.

Despite what seemed like promising political progress made at last year’s COP, the IEA’s latest report on CO2 emissions shows that during 2021 green house gas emissions reached all time highs. According to the agency, coal accounted for 40% of the growth of greenhouse gas emissions last year reaching an all-time high of 15.3 billion tonnes.

The report authors say that the price of gas has driven the increased use of coal for electricity generation notably in the United States and Europe. Gas-to-coal switching from electricity generation accounted for over 100 million tonnes of extra global CO2 emissions, said the report, as it was cheaper to operate coal power plants than gas powered ones throughout most of last year.

Russia’s invasion of Ukraine is expected to make that worse as countries seek to diversify their energy sources away from Russian gas. Europe currently gets more than 40% of its gas from Russia.

Germany, the Czech Republic, and Romania have all announced that nothing – including burning more coal – is off the table when it comes to shoring up vital energy supplies amid Russian aggression.

"Pragmatism must trump every political commitment," Germany’s Economy Minister Robert Habeck told public radio Deutschlandfunk quoted by Reuters news agency.

"Short term it may be that, as a precaution and in order to be prepared for the worst, we have to keep coal-powered plants on standby and maybe even let them operate."

In the UK, unconfirmed reports suggest that officials are exploring the idea of extending the life of coal-fired power plants which were expected to be decommissioned by 2024. Coal, along with other energy sources like nuclear, is expected to be part of the energy mix when the UK announces formal plans later this month on how it intends to shore up the country’s energy security.

“There is a temporary role for coal, which we had hoped would be out of the energy mix by the end of this decade. But it will stay longer. We will need it until we find alternative sources. Until that time, even the greenest government will not phase out coal,” said Václav Bartuška, the Czech government’s energy security commissioner, in an interview with news site Seznam Zprávy, quoted in a news article.

Romania’s energy group CE Hunedoara has increased hard coal production by 60% in recent weeks up from around 1,000-1,100 tonnes from 600-700 tonnes per day, according to news reports.

While increasing coal use does not figure in the official 10-point plan published this month by the IEA to reduce EU reliance upon Russian energy supplies, the IEA acknowledges that switching to coal would provide a fast, short term solution to the current energy challenges.  

“We estimate that a temporary shift from gas to coal- or oil-fired generation could reduce gas demand for power by some 28 bcm before there was an overall increase in the EU’s energy-related emissions,” wrote the agency in a press release about the plans.

The markets have noticed. The price of coal has rapidly increased in recent months, up nearly 300% year on year to above $400 US per tonne earlier this month, according to data from Trading Economics.   

The increasing use of coal is a blow to the goals of the 2021 climate summit. As world leaders try to hobble together an energy mix that provides low-cost and reliable energy without Russian oil and gas, the black rock offers an all too seductive alternative.

Until alternative sources of green energy become more widely and economically available, history may need to wait a little longer for coal to be assigned to a page in its books.