Europe’s largest Russian gas buyers raced Monday to find other fuel sources. They could also burn more coal to deal with lower gas flows from Russia, which could lead to an energy crisis in winter.
Germany, Italy and Austria have all indicated that they believe coal-fired power plants can help the continent get through the crisis that has seen gas prices rise and increased the challenges facing policymakers fighting inflation.
Monday’s announcement by the Dutch government that it would lift a production cap at coal-fired power plants was followed by the activation of the first phase in its energy crisis plan.
Natural gas prices have risen further this morning as Moscow's supply cuts spread chaos across the continent. Sweden, Italy and Denmark declared an "early warning" on shortages. Shipments through the Nord Stream pipeline remained at about 40% of capacity.
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Due to uncertainty in Russian supply, Denmark has also started the first phase of an emergency gas plan.
Italy is closer to declaring an energy emergency after Eni, an oil company, said that Gazprom in Russia told it would only receive a portion of its request for gas supplies Monday.
Germany has also seen lower Russian flows and has now announced its latest plan for gas storage. It could also restart the coal-fired power stations it had planned to eliminate.
Robert Habeck, Economy Minister, said that while it was painful to do so, it was necessary in order to reduce gas consumption. He is part of the Green party, which has advocated for a quicker exit from coal, which emits more greenhouse gases.
“But if it’s not done, then there is a risk that the storage units will not be sufficient at the end of the year towards winter. He said that if we don’t do it, then we will be manipulated on a political basis.”
Russia’s earlier criticism of Europe was repeated Monday, blaming Europe for its invasion of Ukraine. The West imposed sanctions as a response to Russia’s invasion. Ukraine is a major gas transit route to Europe and a major exporter of wheat.
On Monday, the European benchmark Dutch front-month gas contract was trading at 124 euros ($130/MWh), down from 335 euros this year but up more than 30% over its level last year.
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