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Europe could go back to coal as Russia refuses gas flows | World

By Vera Eckert and Francesca Landini | Reuters

FRANKFURT — Europe’s biggest buyers of Russian gas were rushing to find alternative fuel sources and were even considering burning more coal to cope with reduced gas flows from Russia on Monday, which threaten an energy crisis in winter if the stores are not filled.

Italy’s Eni said it was told by Russia’s Gazprom it would receive only part of its gas supply request on Monday, bringing the country closer to declaring a state of alert that will trigger emergency measures. saving gas.

Germany, which has also faced a drop in Russian gas flows, announced its latest plan on Sunday to increase gas storage levels and said it could restart coal-fired power plants it had l intend to phase out.

“It is painful, but it is a pure necessity in this situation to reduce gas consumption,” said Economy Minister Robert Habeck, a member of the Green Party who has pushed for a faster exit from coal. , which produces more greenhouse gases.

“But if we don’t do this, we run the risk that the storage facilities will not be sufficiently full at the end of the year towards the winter season. And then we are blackmailed at the political level,” he said.

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Russia repeated on Monday that Europe was solely responsible for the gas crisis, after the West imposed sanctions in response to Moscow’s invasion of Ukraine, a route of transit of gas to Europe, as well as a major exporter of wheat.

The energy crisis is adding to the headache for European policymakers who are already worried about soaring inflation in household energy bills and food prices.

The first-month Dutch Benchmark gas contract traded on Monday at around 127 euros per megawatt-hour, up more than 50% since the start of 2022.

The chief executive of Germany’s biggest electricity producer, Markus Krebber, said electricity prices could take three to five years to fall back to lower levels, reducing household spending and weighing on businesses. economic outlook.

Russian gas flows to Germany via the Nord Stream 1 gas pipeline, the main supply route to Europe’s biggest economy, were still operating at around 40% capacity on Monday, although they had increased slightly since the beginning of last week.

Both Eni and German utility Uniper said they were receiving less than their contracted volumes of Russian gas.

Back to coal

Germany’s economy ministry said returning coal-fired power plants could add up to 10 gigawatts of capacity in case gas supplies reach critical levels. A law relating to the move will be presented to the upper house of parliament on July 8.

Along with a return to coal, German measures will include an auction system starting in the coming weeks to incentivize industry to consume less gas and financial aid to the German gas market operator, via the public lender KfW, to fill gas storage facilities faster.

The Austrian government agreed with utility Verbund on Sunday to convert a reserve gas power plant to generate electricity from coal if tight gas supplies from Russia lead to an energy emergency.

Germany and Italy are among the most dependent on Russian gas, but other European countries have also faced gas supply shortages, while consumption has increased in an unusual way for the period of the year after a heat wave boosted the use of air conditioning.

Gazprom did not immediately respond to an emailed request for comment on its deliveries to Italy.

Kremlin spokesman Dmitry Peskov said Thursday that the supply cuts were not premeditated and were related to maintenance issues. Italian Prime Minister Mario Draghi dismissed this explanation as a lie.

Italy, whose technical committee for gas is due to meet on Tuesday, said it could declare a heightened state of gas alert this week if Russia continues to limit its supplies.

The move would trigger consumption reduction measures, including gas rationing for some industrial users, increased production at coal-fired power plants, and demand for additional gas imports from other suppliers under existing contracts.

Additional reporting by Susanna Twidale in London and Nora Buli in Oslo.

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Post expires at 1:57am on Friday July 1st, 2022