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Tight Markets, Logistics, Bottlenecks Could Cause Coal Shortage by Bridget Ryder

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Tight Markets, Logistics, Bottlenecks Could Cause Coal Shortage

On August 10th, the EU’s coal embargo will go into effect, leaving Europe to cross its fingers that its scramble to import more coal from countries other than Russia will be sufficient. Russia supplies 70% of all Europe’s thermal coal imports, and, at the same time that EU countries will no longer be able to source from Russia, several European countries are also firing up old coal power plants as an alternative to Russian natural gas.

EU states have been buying coal from wherever they can—Australia, Columbia, South Africa, Indonesia, Nigeria, Mozambique, Namibia, and Nigeria. Nevertheless, some analysts fear Europe could still face a coal shortage, potentially caused by a perfect storm of tight global supplies and logistics issues in Europe. 

Germany and Poland are the countries facing the greatest likelihood of suffering from a coal shortfall. 

Analysts consulted by Politico estimate the country will face a 1-to-2-million-ton shortage this year that will hit households the worst. 

As the European Conservative reported in July, coal remains a major energy resource for many Poles, with 4.3 million households consuming around 7.4 million tonnes of coal per year, according to the ministry of climate and environment. Reuters also reports that 80% of Poland’s electricity is produced through coal. While environmental policies coming from Brussels have curtailed Poland’s domestic coal production in recent years, increasing its dependence on imported coal, some also accuse the Polish government of a lack of foresight in facing the present crisis. 

According to an investigation by Polish news outlet Onet, Prime Minister Mateusz Morawiecki didn’t carry out a formal impact assessment before supporting EU sanctions on Russian coal and was slow to react to warnings in March from his cabinet that more work needed to be done to secure a strategic reserve. The government stopped importing Russian coal in early May, while other European countries continued to take advantage of Russian coal up to the embargo deadline. Only in July did Morawiecki announce the appointment of a minister dedicated to resolving the country’s coal crisis. 

In Germany, industry would be the first to suffer from a lack of coal. Germany consumes 35% of the coal and ligate imported into the EU. While the government has assured the public that the country has sufficient coal supplies, getting coal to users faces logistical issues, Politico reports.

The surge of coal imports, up 35% compared to this time last year, according to Bloomberg, has created serious congestion in the Antwerp-Rotterdam-Amsterdam regional ports, the main hub for energy imports. Port storage facilities for coal are almost at capacity and there is a shortage of barges to carry the coal out along Europe’s waterways. The bottleneck is also extending into the Rhine River, as this summer’s drought and heat wave has so lowered the river’s water level that fewer boats can pass through at a time. 

Besides logistical problems, global demand is pushing prices through the roof. Bloomberg reports that in June, year-long futures had hit all time highs. Coal prices on the API2 Rotterdam hub, a European benchmark, reached $380 per ton last week, four times the price of a year ago.

Winter is not here yet, but Europe, particularly Poland and Germany will be keeping their fingers crossed that they can deliver coal to industry and households. 

Bridget Ryder is Spain-based writer. She has written on politics, environment, and culture for American and international publications. She holds degrees in Spanish and Catholic Studies.