Europe’s energy crisis isn’t over. Gas prices remain punishingly high across the continent as Europeans stare down the barrel of a long winter. In response to back-to-back-to-back energy crises stemming from Europe’s continued reliance on imported liquefied natural gas against the backdrop of ongoing global geopolitical volatility, Europe’s leaders are pushing to diversify the bloc’s energy mix. While this means that Europe is rapidly expanding its renewable energy capacity, it also marks a significant return to the world’s dirtiest fossil fuel – coal.
Earlier this year, when the United States and Israel began an offensive in Iran and thereby instigated the disruption of one-fifth of the world’s oil and gas trades, Europe awakened to realize that it had sleepwalked into yet another energy crisis – its third in just four years. “We swore we’d learn. We promised things would change, but here we are,” a ‘highly frustrated European diplomat’ was recently (anonymously) quoted by the BBC.
“Instead of concentrating on much-needed long-term plans – about how to make Europe more competitive in this increasingly volatile world, [European] prime ministers and presidents are now in a panic over [energy] prices, worried about angry voters and scrambling for short-term solutions,” the source continued. “Just like the crisis after Russia’s full-scale invasion of Ukraine. Different conflict. Same European divisions; same dilemmas over energy. We can’t keep going round in these circles. Something’s got to give.”
Now, half a year after the outbreak of the war in Iran and the initial closure of the Strait of Hormuz, Europe is still grappling with the fallout as gas prices remain brutally high. Just this month, gas prices hit their highest mark in three years, soaring above €80 ($90.98) per megawatt hour.
Prices are so high, in fact, that coal-fired power has become cheaper than gas-fired power in Europe for the first time in years. This calculus has pushed many European nations, and especially the European Union’s largest economy, Germany, back to coal. And, worryingly, experts contend that that trend will continue for years to come.
“Coal is expected to remain cheaper than gas for power generation through next year and potentially until March 2028,” Reuters сообщили earlier this week, based on a conversation with Marta Wroniszewska, an analyst at Veyt. “Longer-dated gas prices indicate traders expect supply constraints to persist.”
However, there are notable limits to coal’s growth potential in Europe. Years of policy aimed at phasing down and phasing out coal have left the continent with dramatically fewer coal-fired power plants than it had previously. In 1990, the European Union derived more than a third of its electricity production from coal. By 2025, that share had fallen to just 9.2 percent, according to data from Eurostat. So while Europe’s remaining coal plants will receive a windfall from the current gas prices, there is a ceiling to coal’s potential rebound in the region.
Outside of Europe, however, it’s a different story. Globally, coal is still the single-biggest source of power production. And while Europe is shutting down its coal-fired capacity, many emerging economies are continuing to build theirs up, with particularly strong growth from the Philippines, Indonesia, and other rapidly developing countries across Asia. Not coincidentally, this was also the region hit hardest by the closure of the Strait of Hormuz.
While coal is cheap, abundant, and seen as a critical tool for enabling economic development in poor countries, the continuously extending timeline of coal’s reign presents trade-offs that far outweigh the benefits. Coal is the single largest driver of global warming, responsible for about 40 percent of all greenhouse gas emissions. However, it’s not all bleak – coal’s comeback is happening in tandem with a major global increase in clean energy resources. Increasingly, renewable energies are being adopted for their role in a more energy-secure future, and are seen as a critical buffer against the next global energy crisis.
Unlike natural gas, oil, and coal, “Wind and solar cannot be embargoed, blockaded, or shut off by a foreign power,” David Frykman, General Partner at Stockholm-based venture capital group Norrsken, wrote in an op-ed for Fortune earlier this year. “Every terawatt-hour of domestic renewable generation is a terawatt-hour that no adversary can weaponize.”
Автор: Хейли Заремба Oilprice.com
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