April 2022
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.