Once upon a time, Europe was on its gallant path towards decarbonization, clearly departing from coal to procure cleaner sources of energy. However, a global pandemic, record high gas prices and Russia’s invasion of Ukraine have created the perfect conditions for the renaissance of coal in Europe’s energy generation.
A number of factors contributed to the European energy crisis
that witnessed a significant increase on coal-fired power generation. On the
demand side, energy consumption increased with the post-pandemic economy
recovery after nations relaxed most of the Covid-19 restrictions.
Two
consecutive colder than average winters since 2020 also added to the increase
in demand. On the other side, supply disruptions across the globe and low gas
domestic production in Europe concurred with the wind drought and issues with Russian
pipeline gas flows.
Competition for spot LNG cargoes strengthened with Asian
economies refilling their gas inventories throughout 2021, resulting in European
gas prices soaring to record-highs. Incidentally, Europe’s gas stocks began
2021-2022 winter season at their lowest level for eight years, increasing
Europe’s need to procure thermal coal to guarantee energy security in the
region.