Winter power outage fears spark coal rush across Europe

European countries have launched a new coal dash amid a battle to keep the lights on following Russia’s invasion of Ukraine.

The Netherlands joined Britain and Germany on Monday in warning that it will have to use the dirtiest fossil fuel more this winter to avoid a looming energy shortage.

This decision risks opening a split between the Member States of the European Union and Brussels, which is committed to the green transition.

Ursula von der Leyen, President of the European Commission, told the Financial Times that governments must remain focused on “massive investment in renewable energy”.

She added: “We have to make sure that we use this crisis to move forward and not roll back dirty fossil fuels.”

The price of coal has jumped since Feb. 24 as Russian coal and gas supplies are shunned, leaving power producers to compete for supplies from elsewhere.

There are growing fears that Russian gas could be cut, which will further increase demand and increase the prospect of blackouts or energy rationing on the continent.

Deirdre Michie, head of pressure group Offshore Energies UK, said in a speech on Monday that the risk of shortages was real.

Speaking at an event in the House of Commons, she said the transition away from fossil fuels will take time and added: ‘We could be living the reality of not getting it right this winter, if the concerns raised about blackouts and shortages are coming.”

The price of coal delivered in Northern Europe has already reached record highs of $335 [£273] per ton, compared to averages of around $80 before the coronavirus pandemic.

Myles Allsop, an analyst at UBS, predicted that prices could stay high for one to two years. The turmoil in the gas markets is driving up gas prices and thus the demand for coal as an alternative.

He said: “Recent events in the gas market are very supportive of coal prices. This keeps the price of coal at these high levels. Coal prices will begin to correct as gas markets begin to normalize.

“It is very difficult to assess how high coal prices will be. What you can say with some degree of confidence is that there is no quick fix to the gas market.

“Gas prices are going to stay high, coal prices are going to stay high, probably for one to two years.”