Europe is facing an energy crisis that threatens its ability to phase out coal by 2030.
(Photo Credit: Stephane Mahe/Reuters)

Coal Is Winning in Europe For Now…But Why?

Kurt Davis Jr.


The article was originally published in “The Musings Of A Politics Junkie & Closet Economist.” To read more, please visit the website.

Coal’s is winning the battle but losing the war (at some level)…

The European Union (EU) is facing the potential of a very cold winter as the flow of Russian gas becomes more uncertain and less bountiful. Back in May, Gazprom closed the Yamal gas pipeline, which runs through Belarus and Poland and delivers gas to Germany and other EU nations.

Then Gazprom cut gas deliveries through Nord Stream 1 by 75% in mid-June followed by a 10-day shutdown in early July for maintenance work. As the flow of gas becomes more at risk, gas prices have skyrocketed 450% as compared to a year ago.

EU nations accordingly are searching for alternative fuel supplies to avoid an energy crisis in the winter. Several EU nations are advocating for coal-fired power plants to protect the continent in the midst of these problems with a number of EU countries extending the life of coal-fired power plants or reopening others to manage power supplies.

Germany authorized the reactivation of 16 dormant coal-fired and oil-fired power plants. The Dutch government removed the cap on production at coal-fired power plants last month as part of its energy crisis plan, allowing these plants to run at full capacity through 2023.

As a result, the global coal consumption this year, according to the International Energy Agency (IEA), is set to match the world’s record consumption set in 2013 as the EU works to conserve supplies of natural gas.

Demand for this polluting fossil fuel will rise by 7% this year in the EU, even while member countries are targeting a reduction in carbon emissions. To be fair, the war in Ukraine is only exacerbating an existing problem…coal consumption in the EU jumped 14% in 2021 as European economies rebounded out of covid-19 lockdowns.

But why is coal becoming the first choice in the search for alternatives? And should this worry those advocating for a reduction in carbon emissions?

Nuclear power is stuck in the middle…

Nuclear power does not release harmful greenhouse gases when producing power yet nuclear power has its critics that worry about the risk of nuclear accidents and the storage of radioactive nuclear waste. Although nuclear power plants are expensive to build, they are relatively cheap to operate over the long term. But nuclear ‘disasters’ can be costly.

Despite its rarity and uniqueness, the Fukushima nuclear disaster remains the reference point for when things go wrong with nuclear plants. A tsunami flooded and damaged the Fukushima nuclear reactors in 2011 and inflicted a death toll of nearly 20,000 people with costs from that Fukushima disaster estimated to be in the hundreds of billions.

It is these disasters that dominate public conversations in some countries. For example, when the European Commission suggested nuclear alongside coal to wean itself off Russian gas, several European countries, including Germany and Sweden, objected. Amid these objections, coal is disguised as a preferred “green” solution (at least for the moment) compared to nuclear power.

Part of the reasoning behind coal’s re-emergence is timing. Newly constructed nuclear power plants will be late in the context of today’s ‘Russia challenge’. However, some nuclear power plants, for example in France and Germany, are running on “load-following mode” where their operating levels are reactive to the supply and demand imbalances caused by the intermittency of renewable sources on the grid thus governments could choose to increase their production in the short-term. Belgium, for example, has nuclear plants scheduled for shutdowns that could be further delayed. These are low-cost options (without any construction) for nuclear energy that should be considered in the short-term.

Coal is a quick short-term answer with no long term commitment…

No European country has reversed its commitment to phase out coal by 2030. The use of coal effectively is a short-term solution to a greater problem. Germany, for example, has increased its coal usage while equally restating that its “coal exit in 2030 isn’t wobbling at all. It is more important than ever that it happens in 2030.” German Chancellor Olaf Scholz was quoted calling the move towards coal regrettable. The Dutch government is not changing its 2029 coal phase-out date.

There is also an argument that the current energy crisis, in many ways, has accelerated (and will continue to accelerate) the EU transition to clean energy. Back in May, the European Commission updated its REPowerEU Communication with a significant ramp-up in wind and solar development. Renewables are expected to account for approximately 70% of power production by 2030.

The ramp-up is always at risk as renewables, such as wind and solar, can be intermittent, and storage / interaction with the grid can definitely be improved over time. Also, other sources of renewable energy, such as renewable hydrogen and green-ammonia, will take some time to become commercially viable options on a large scale.

Several European leaders are pushing for an agreement to cut emissions 55% by 2030 off 1990 levels with the greater part of those cuts coming in the later years of the plan. There is significant risk with realizing deep cuts in later years as the plan (in some irony) still depends on Europe’s ability to source natural gas (outside of Russia) which is the challenge today. European leaders have inked deals with Algeria and Azerbaijan to increase natural gas imports in next 5–7 years but again the long term production and inflows remains a risk from these countries among others.

The reality of finding sufficient gas resources by 2030 coupled with renewable power will be a high hurdle. The EU imported more than 40% of its total gas consumption, 27% of oil imports and 46% of coal imports from Russia in 2021…replacing all those energy sources may actually require time beyond 2030. Yet, for now, that is not an accepted form of reality…better to assume you can make up time in the later rounds (as you would in a sports match) because the other alternative is simply quitting on your efforts today.

The article was originally published in “The Musings Of A Politics Junkie & Closet Economist.” To read more, please visit the website.



Kurt Davis Jr.

Investor, Advisor, Writer / Speaker, Council on Foreign Relations, Chicago Booth MBA, UVA JD, Avid Traveler, Foodie, Politics Junkie & Closet Economist…