European leaders seeking to punish Russia for reports of atrocities in Ukraine approved a ban on Russian coal on Thursday, the easiest-to-replace imported energy source.
It was originally expected to arrive on Wednesday, but was delayed due to lengthy discussions among European Union officials, and the bloc’s latest round of sanctions included a plan to shut down Russian coal for four months. The original proposal offered a shorter, quarterly withdrawal.
The slight delay in the decision-making process reflects the challenges of reaching an agreement between all 27 member states on sanctions, especially given that some bloc countries rely more on Russian energy than others. Sanctions must be approved by all Member States.
And there were fears that cutting off coal supplies could do more harm to the European Union than to Russia. Although the European Union depends on Russian coal, the bloc could more easily replace it with imports from other countries than it could replace natural gas and oil. But Russia’s ban on coal could lead to higher energy prices for European consumers, given the bloc’s current shortage, according to Rystad Energy, a consulting firm. Carlos Torres Diaz, Rystad’s senior vice president, called the potential sanctions “a double-edged sword.”
Imports from Russia account for 47% of coal entering the European Union in 2019, according to the European Union’s statistical office Eurostat, making the country the world’s most important fuel supplier. That amounts to four billion euros of coal a year, said Ursula von der Leyen, president of the European Commission.
Each member state has different energy needs, and among those most dependent on Russian energy in general is Germany, the bloc’s largest economy. Approximately half of all coal imported by Germany comes from Russia, in total last year €2.2 billion, according to government figures. Most are used to generate electricity and power the steel industry in Germany.
Lignite, or brown coal, the only fossil fuel still mined in Germany, is burned to generate energy. It is also the dirtiest fossil fuel, which gives urgency to stop coal burning. But 2021 turned out to be less windy than expected, damaging the country’s wind energy efforts and leading to a nearly 5% increase in coal-fired energy for the year.
Chancellor Olaf Scholz’s government outlined plans last year to phase out coal by the beginning of the next decade, and last month Robert Habeck, vice chancellor and economy minister, said Germany would seek to phase out Russian coal by the end of the decade. summer.
“The way we will implement the coal embargo is well prepared,” Mr Habek said on Wednesday.
Diplomats in Brussels said Germany and other countries have during the negotiations he asked for more time to execute the current orders and terminate the existing contracts before imposing the measure.
German companies have already renegotiated contracts with other coal-exporting countries, Mr Habek said. But shipments that have already been ordered and are underway from Russia will not be stopped or returned, he added. “If we bring these ships back, then we could face a shortage,” he told reporters in Berlin.
Coal from the United States, Colombia and South Africa could help fill the gap left by reducing imports from Russia, according to the German Coal Importers Association, an industrial group representing companies that depend on coal supplies from abroad.
In a telephone conversation Wednesday, Mr. Scholz and Colombian President Ivan Duque Marquez discussed the war in Ukraine and energy, the chancellor’s office said.
Australia accounted for almost a third of coal imports to the European Union in 2019. Australian markets have already seen a jump in their coal prices as companies in Europe turn to them to ask for fuel.
The Russia-Ukraine war and the global economy
Poland is the EU country that still relies most on coal. While much of the country’s coal is mined in the country, approximately 20 percent was imported from Russia last year.
Last month, Polish Prime Minister Mateusz Morawiecki proposed legislation banning coal imports from Russia.
Stopping Russian oil and natural gas will be much more difficult. Germany has already reduced its dependence on gas from Russia by 15 percent in the first three months of the year, according to Mr Habek. But industry leaders have warned against imposing sanctions on Russian natural gas, saying it could lead to significant job losses in the chemical, mining and pharmaceutical sectors.
Mr Habek presented draft legislation to accelerate the expansion of renewable energy in Germany, focusing on generating more through wind and solar energy.
But it will take several years before new terminals are built that will allow liquefied natural gas to arrive by ship, offering a replacement for Russian gas coming through a pipeline. And even if approval processes are streamlined, it could take years for terminals to replace almost 22% of Germany’s energy mix, which comes from natural gas.
Matina Stevis-Gridnef contributed to the reporting.