The European embargo on Russian coal comes into force at midnight on Wednesday, four months after it was adopted as part of a fifth round of sanctions against Moscow, as the European Union (EU) faces heightened tensions over its energy supplies.
This embargo decreed in April by the Twenty-Seven becomes effective at the end of a transition period of 120 days. Only commercial contracts concluded before April 9 could be honored during this period. This was the first EU sanction hitting the Russian energy sector. The Europeans then decided at the end of May on a gradual embargo by the end of 2022 on the bulk of Russian oil.
Until last year, the EU imported 45% of its coal from Russia for a value of 4 billion euros per year, and certain countries (Germany, Poland, etc.) which used it for their electricity production in were particularly dependent.
While Europe’s annual consumption of coal, a polluting fossil fuel, fell from 1,200 to 427 million tonnes between 1990 and 2020, the closure of many mines on the continent has contributed to increasing Europeans’ dependence on imports.
EU purchases from Russia have thus increased from eight million tonnes in 1990 (7% of imports) to 43 million in 2020 (54%).
Faced with the fall in Russian gas deliveries and the risk of shortages, several countries (Germany, Austria, the Netherlands, Italy) have announced in recent months an increased use of coal-fired power plants.
In the first five months of 2022, electricity produced from coal in Germany jumped 20%, according to Rystad.
The total embargo on Russian coal is pushing Europeans to source supplies elsewhere – the United States (about 17.5% of EU coal imports in the first half of the year), Australia, South Africa and even Indonesia.
Faced with tensions on the markets, the equation promises to be complicated for Poland, a traditional mining country but a net importer of coal: while local production has amounted in recent years to around 55 million tonnes per year, the country had to still import about 12 million tons, including 10 from Russia.
The populist nationalist government imposed a total ban on Russian coal imports in mid-April, causing serious shortages and skyrocketing prices – a ton of coal in Poland is currently worth four times more than a year ago.
Warsaw has capped prices and rationed purchases, while limited port, railway and waterway capacity is making it harder to increase imports, heightening concerns about winter supplies.