Europe may return to coal as Russia rejects gas flows

Pipes on the touchdown amenities of the “Nord Stream 1” fuel pipeline in Lubbmen, Germany, March 8, 2022. REUTERS/Hannibal Hanschke/File Picture

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  • Germany might take ‘painful’ step to ignite coal energy
  • Italy and Austria are additionally seeking to burn extra coal
  • Excessive fuel costs add to the already excessive inflation charges

FRANKFURT/MILAN (Reuters) – Europe’s greatest purchaser of Russian fuel raced to search out various gas provides on Monday and will burn extra coal to counter decrease fuel flows from Russia threatening a winter power disaster if retailers usually are not refilled.

Germany, Italy, Austria and the Netherlands have indicated that coal-fired energy vegetation can assist see the continent undergo a disaster that has pushed up fuel costs and elevated the problem for policymakers battling inflation.

Italian Eni (ENI.MI) Russia’s Gazprom mentioned (GAZP.MM) It is going to obtain solely a portion of its demand for fuel provides on Monday, prompting the nation to come back near declaring a state of alert that may launch measures to avoid wasting fuel.

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Germany, which has additionally seen decrease Russian flows, introduced on Sunday its newest plan to extend fuel storage ranges and mentioned it might restart coal-fired energy vegetation that it was supposed to section out.

“It hurts, however on this case it’s completely crucial to scale back fuel consumption,” mentioned Economic system Minister Robert Habeck, a Inexperienced Occasion member who has pushed for a sooner exit from coal that produces extra greenhouse gases.

“But when we do not, we threat that the storage amenities is not going to be full sufficient on the finish of the yr within the winter season. After which we get blackmailed on the political degree,” he mentioned.

Russia on Monday repeated its earlier criticism that Europe has solely itself blaming After the West imposed sanctions in response to Moscow’s invasion of Ukraine, it’s a route for transporting fuel to Europe in addition to a serious supply of wheat.

The Dutch fuel contract for the month of the closest maturity, the European customary, was buying and selling at round 124 euros ($130) per megawatt-hour on Monday, down from this yr’s peak of 335 euros, however nonetheless greater than 300% above its degree a yr in the past. , earlier than costs begin to rise.

Slowly fill shares

CEO of Germany’s largest power producer RWE (REWEG.DE)Marcus Kreiber, mentioned power costs may take three to 5 years to fall to decrease ranges.

Russian fuel flows to Germany through the Nord Stream 1 pipeline, the principle provide path to Europe’s largest economic system, have been nonetheless working at round 40% of capability on Monday, though that they had risen because the begin of final week.

Ukraine mentioned its pipelines may assist fill any provide hole by means of Nord Stream 1. Moscow mentioned earlier it couldn’t pump extra by means of pipelines that Ukraine had not already closed.

Eni and German utilities Uniper (UN01.DE) It was among the many European firms that mentioned they have been receiving much less contracted Russian fuel, despite the fact that fuel shares in Europe stay full – albeit slower.

It was about 54% full on Monday towards the EU’s goal of 80% by October and 90% by November.

The German Economic system Ministry mentioned restoring coal-fired energy vegetation may add as much as 10 gigawatts of energy if fuel provides attain vital ranges. The transition legislation might be introduced to the Senate on July 8.

Apart from switching to charcoal, the newest German model measures An public sale system to begin within the coming weeks to encourage the business to devour much less fuel, and monetary help to the German fuel market operator, through state lender KfW (KFW.UL), to fill fuel storage amenities sooner.

German utility firm RWE mentioned on Monday it might lengthen the operation of three 300 megawatt brown coal energy vegetation if wanted in the course of the fuel provide disaster.

Russia blames the West

The Austrian authorities agreed with Verbund (VERB.VI) Sunday to transform a gas-fired energy plant to coal in case the nation faces an power emergency. OMV (OMVV.VI) On Monday, Austria is about to obtain half the same old quantity of fuel for the second day. Learn extra

Dutch station NOS mentioned Monday that coal-fired energy vegetation within the Netherlands might be allowed to ramp up manufacturing to assist depend on Russian fuel, citing authorities sources. The Dutch Vitality Minister was as a result of make an announcement on fuel provides at 1530 GMT. Learn extra

Russia’s state-controlled Gazprom diminished capability final week alongside Nord Stream 1, a serious pipeline supplying Germany and others, citing delays in returning gear served by German power firm Siemens. (SIEGn.DE) in Canada.

“We have now fuel and it’s prepared for supply, however the Europeans should return the gear that must be repaired in accordance with their obligations,” Kremlin spokesman Dmitry Peskov mentioned.

German and Italian officers mentioned Russia was utilizing this as an excuse to chop provides.

Italy, whose fuel technical committee is anticipated to fulfill on Tuesday, mentioned it might declare a heightened alert on fuel this week if Russia continues to curb provides.

The transfer will set off measures to scale back consumption, together with rationing fuel for particular industrial customers, ramping up manufacturing at coal energy vegetation, and requiring extra fuel imports from different suppliers beneath current contracts.

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Extra reporting by Susanna Tudel in London, Nora Polley in Oslo, Bart Meijer in Amsterdam, Alexandra Schwartz-Gurlich in Vienna; Written by Barbara Lewis. Modifying by Edmund Blair and Jean Harvey

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