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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Europe Could Turn To More Coal If Gas Crunch Persists

Despite its ambitious green energy targets, Europe could be forced to burn more coal this winter if natural gas stockpiles are not adequately replenished amid record-high gas prices, an expert on the EU energy market told Russian news agency TASS on Thursday.

Gas prices continue to be pushed up by the risk of insufficient gas storage ahead of the winter heating season, EU energy expert Simonas Vileikis told TASS.

“If inventories are not refilled now and winter turns out cold enough, EU countries may be forced to fire up power plants burning fuels other than gas, including coal, to generate enough electricity,” Vileikis said. 

This scenario will hit the EU’s ambitions to reduce greenhouse gas emissions, the expert noted.

Gas prices in Europe have shot up in recent weeks, with the European benchmark, the Dutch Title Transfer Facility (TTF) hub, surging by 250 percent since the beginning of the year, as per Reuters estimates. Gas prices in major economies, including Germany and France, have also spiked, leading to record electricity prices.

The whole of Europe, including the UK, is grappling with soaring natural gas and electricity prices ahead of the winter heating season due to tight gas supplies, very low gas inventories across the continent, and low wind power generation amid still weather.

In the UK, now a non-EU country, surging natural gas prices and warm and still weather forced the country to fire up last week an old coal plant that was on standby in order to meet its electricity demand.

The rally in natural gas prices is also driving global demand for coal. Goldman Sachs this week nearly doubled its price projection for coal prices in Asia, expecting the benchmark Newcastle thermal coal to average $190 a ton in the fourth quarter, up from a previous forecast of $100 per ton, due to sky-high gas prices ahead of the winter heating season.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on September 16 2021 said:
    It is already happening with Germany being forced to use increasing volumes of coal for electricity generation because renewables on their own can’t satisfy the electricity demand.

    Europe could indeed be forced to burn more coal this winter if natural gas stockpiles are not adequately replenished amid record-high gas prices. If inventories are not refilled now and winter turns out cold enough, EU countries may be forced to fire up coal power plants.

    And while this will hit the EU’s ambitions to reduce greenhouse gas emissions, people who badly need electricity for warmth and other uses won’t care less how their electricity is generated.

    Nord Stream 2 couldn’t have come at a more opportune moment amid surging gas prices in the EU. It will enhance the EU’s energy security and stabilize soaring gas prices in Europe by bringing additional 50 billion cubic metres of natural gas supplies to the EU.

    The irony, however, is that Germany whose Chancellor Angela Merkel fought valiantly against US sanctions on Nord Stream 2 is delaying the immediate benefits of the gas pipeline by its energy regulator taking its time before granting Nord Stream 2 operating certification when in fact it should be granted immediately a temporary operational licence before Winter.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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