Europe's turn back to coal a 'temporary' measure in response to Russian gas cuts

Germany and several of its European neighbours are returning to coal-fired power plants in order to conserve precious reserves of natural gas, a temporary but some say necessary move after Russia cut back its gas exports following the invasion of Ukraine.

Coal is much dirtier than gas, and it emits significantly more climate-warming greenhouse gases when burned.

Though Germany's climate-focused government was on its way to phasing out coal from its energy sector, it has to make sure it reserves enough gas to heat homes, said Chris Bataille, an adjunct research fellow with the Columbia Center on Global Energy Policy.

"Part of the reason the Germans are allowing these coal plants to turn back on right now, is they want to shut off their gas plants so that they can refill their gas storage for the winter," he said.

New legislation will allow the country to use 15 coal-fired power plants, all of which were slated to be phased out this year or next.

Buying time for the energy transition

However, the temporary move to coal may not be the end of Germany's robust climate plans. The country is set to phase out coal by 2038, a goal that's still in place. Experts say the country's coalition government, which includes a Green party, is trying to buy time with coal so that it can come up with a more sustainable long-term solution.

"I think in the medium term and in the long term, all of this is going to be supportive for climate policy," said Johan Lilliestam, professor of energy policy at the University of Potsdam. "Because, what goes along with this, is it's really a redoubling of efforts to deploy wind power, to deploy solar power, to insulate houses, build heat pumps."

Nearly half of Germany's electricity is produced by renewable sources, Lilliestam said, including wind, solar, biomass and hydro. With the biggest electricity system in Europe, Germany's shift to renewable energy is significant.

"It's not great news, but it's also not really a disaster because this is going to be a temporary measure," Lilliestam said of the return to coal. "The coal phase-out decision stands and the coal is going to disappear from the power system by 2038 at the latest."

Natural gas is used to produce electricity in German power plants, and it's also to produce heat in homes and buildings. Restarting coal-fired power plants will conserve the gas that would otherwise be used to produce electricity, so that it can be used for heating instead.

Since only a limited amount of Germany's electricity is produced from gas, Lilliestam says it follows that the use of coal to replace that gas will also be limited.

A tight global gas market

Still, the potential use of mothballed coal power plants is alarming to some environmentalists, especially in light of the escalating climate change crisis. Anne-Sophie Corbeau, a research scholar on gas markets at Columbia University's Center on Global Energy Policy, said she was "shocked" at Germany's unexpected return to coal.

"All the CO2 that we are emitting now, it's going into the atmosphere, period, and then it's going to stay there."

Germany's goal is to be greenhouse-gas neutral by 2045, with a preliminary target of reducing emissions by 65 per cent by 2030 compared to 1990 levels.

In 2021, German emissions were 38.7 per cent below 1990 levels.

At the same time that Germany, Italy, Austria and the Netherlands are temporarily turning back to coal, Europe is also trying to import more liquefied natural gas (LNG) by ship to firm up its gas reserves for the winter.

But Corbeau says the global LNG market is very tight. It takes years to build new LNG export terminals and import terminals so producers don't have the capacity to move quickly to meet the increased demand.

That means Europe's imports of LNG might spark shortages in other parts of the world.

"Unfortunately we have a new additional demand that nobody was expecting, which is Europe. So Europe would be fighting for all these molecules and it's outbidding other countries, in particular in Asia, possibly in Latin America," Corbeau said.

"So this is going to be too expensive for these countries, which are potentially also going to turn to coal."

Scaling up LNG exports

Canada has experienced the challenge of building up its own LNG export capacity.

There have been 18 such facilities proposed in this country, according to Natural Resources Canada, but none yet exist. Only one export terminal is under construction LNG Canada in B.C. and it's not expected to be operational until 2025.

The pipeline running to that terminal, Coastal GasLink, sparked protests in B.C. and across Canada, with critics of the project raising concerns about the environment and Indigenous land rights.

There are questions, too, about where Canada would find customers for natural gas, Lilliestam said.

While Europe would absorb any additional LNG available in the global market for the next few years, it is still committed to the transition away from fossil fuels, and any supply that might come from Canada in the future would likely be too late, Lilliestam said.

"If you need long-term investments to get LNG terminals up and going in Canada, I don't think you're going to be on time when you're going to have locked yourself into an infrastructure system that at least is probably not going to find customers in Europe."

Russia may cut gas exports further

Before the war in Ukraine, Germany got about 55 per cent of its gas from Russia, according Gazprom, a Russian state-controlled energy company.

Now, the main pipeline from Russia to Germany is operating at 40 per cent capacity, the company said.

Russia blames the drop in production on Western sanctions imposed in response to the invasion, measures it says make it difficult to acquire spare parts to repair and maintain the pipeline.

But European officials believe Russia is also using gas exports as a geopolitical tool in its invasion of Ukraine and to punish Western nations that have imposed sanctions.

Germany's federal Minister of Economic and Climate Affairs Robert Habeck warned that certain industries could be disrupted by the gas shortage.

"Companies would have to stop production, lay off their workers, supply chains would collapse, people would go into debt to pay their heating bills," Habeck told Der Spiegel on Friday, saying it was part of Russian President Vladimir Putin's strategy to divide the country.

Fatih Birol, the head of the International Energy Agency has warned that Europe needs to prepare for gas exports from Russia to fall further, possibly to nothing.

"I think this is geared towards making it harder for Europe to fill up its gas storage, which in turn increases Russia's leverage over European countries in the winter months," he said.

"Considering this recent behaviour, I wouldn't rule out Russia continuing to find different issues here and there and continuing to find excuses to further reduce gas deliveries to Europe and maybe even cut it off completely."

With files from Reuters