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Due to Reduced Gas Supply from Russia, Europe May Return to Coal

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ugljen list / Image by: foto

Russia has reduced gas supplies to Europe, prompting the largest European buyers to race in search of alternative fuels, with some not ruling out a return to coal due to the looming energy crisis if gas supplies are not replenished by winter.

Italian Eni announced that Russian Gazprom informed it that it would receive only part of the requested gas delivery on Monday, bringing the country one step closer to a state of readiness that will be initiated to implement gas-saving measures.

Germany, also facing reduced Russian gas supplies, reported on Sunday its latest plan to increase gas storage levels and announced that it might restart coal-fired power plants that it intended to phase out gradually.

– This is a sore point, but it is necessary at this moment to reduce gas consumption. If we do not do this, we risk that the storage facilities will not be sufficiently filled by the end of the year, according to the winter season, and then we could be politically blackmailed – said Economy Minister Robert Habeck, a member of the Green Party, which has advocated for a faster phase-out of coal-fired power plants due to their high greenhouse gas emissions.

On Monday, Russia reiterated that Europe is to blame for the gas crisis after the West imposed sanctions in response to Moscow’s invasion of Ukraine.

The energy crisis is an additional stumbling block for European lawmakers who are already concerned about rising household energy bills and food prices.

The CEO of Germany’s largest electricity producer RWE, Markus Krebber, said it could take three to five years for electricity prices to return to lower levels.

Russian gas flows to Germany through the Nord Stream 1 pipeline, the main route supplying the largest European economy, were still operating at about 40 percent capacity on Monday, although they have increased since the beginning of last week.

Eni and the German company Uniper reported receiving less than the contracted amounts of Russian gas.

Return to Coal

The German Ministry of Economy stated that the return of coal-fired power plants could increase capacity by up to 10 gigawatts in case gas supplies reach critical levels. The law regarding this move is set to go to the upper house of parliament for a vote on July 8.

In addition to the return to coal, Germany’s measures will include an auction system starting in the coming weeks to encourage the industry to consume less gas, as well as financial assistance for the German gas operator to fill gas storage facilities more quickly, with the help of the state lender KfW.

The Austrian government agreed on Sunday with the utility company Verbund to repurpose a reserve gas power plant to coal if gas supplies from Russia are restricted and an energy crisis occurs.

Germany and Italy are among the countries most dependent on Russian gas, but other European countries have also faced gas shortages, while consumption has risen unusually high for this time of year, after a heatwave prompted increased use of air conditioning.

Gazprom did not immediately respond to a request for comment on its supplies to Italy.

Kremlin spokesman Dmitry Peskov said on Thursday that the reduced supply was not planned and was related to maintenance issues. Italian Prime Minister Mario Draghi dismissed this explanation as false.

Italy, whose technical gas committee is set to meet on Tuesday, announced that it could declare a heightened state of readiness regarding gas this week if Russia continues to restrict supplies.

This move would trigger measures to reduce consumption, including limiting gas for certain industrial users, increasing production in coal-fired power plants, and also seeking greater gas imports from other suppliers under existing contracts.