Germany plans coal inversion to counter cuts

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A ‘BITTER’ NECESSITY:
Lawmakers are considering a bill to allow more coal to be burned as a minister said energy supplies would be ‘really tight’ in winter

Germany is stepping up efforts to respond to a cut in Russian gas supply by reviving coal-fired power plants and providing funding to secure gas for the winter, an effort that would cost around 15 billion euros (15 $.8 billion) at current prices.

The package of measures was announced days after Moscow cut deliveries on its main gas link to Europe, hitting supplies from Germany and creating a ripple effect for France, Austria and the Czech Republic. Austria reacted to the reduction in flows by reactivating an inactive coal-fired power plant.

The return of factories burning highly polluting fossil fuels is the latest sign of how Europe’s climate fight is taking a back seat as governments seek to hedge against energy shortages caused by the invasion of the coronavirus. Ukraine by Russian President Vladimir Putin.

Photo: AP

“It’s a kind of showdown in which Putin has the longest arm at the moment,” German Economic Affairs and Climate Action Minister Robert Habeck, a member of the Greens, said on Sunday evening. ecologists. “But that doesn’t mean we can’t achieve a stronger arm with effort.”

The heightened alarm was triggered after the Kremlin cut deliveries last week in apparent retaliation for Europe’s support for Kyiv. Flows through the Nord Stream 1 gas pipeline were reduced by around 60% when German Chancellor Olaf Scholz and his French, Italian and Romanian counterparts visited Ukraine to support the country’s bid for EU membership .

Scholz’s administration, which had sought to accelerate Germany’s exit from coal, also plans to offer incentives to industry to reduce gas consumption and make unneeded supplies available for storage.

Credit lines to fill the reserves would be provided by public lender KfW, the Ministry of Economic Affairs announced on Sunday.

Although the government did not immediately provide details on the size of the program, German gas storage is at around 57% capacity. Purchasing the approximately 120 terawatt hours needed to recharge the facilities would cost around €15 billion at the current rate of €123 per megawatt hour.

Yesterday, the gas supply from Italian Eni SpA was only “partially confirmed”. Germany’s Uniper SE – the biggest buyer of Russian gas in Europe – also said it was getting less than expected.

Russia’s move sent prices up more than 50% last week, raising fears of worsening inflation.

Since the start of the war in Ukraine, Germany has been bracing for a cut and has dipped into its resources, including securing floating terminals to import liquefied natural gas, to fill a possible supply gap. Europe’s largest economy still depends on Russia for 35% of its gas needs.

“Security of supply is currently guaranteed, but the situation is serious,” said Habeck, adding that supply would be “really tight” in winter without full reserves. “It is obviously Putin’s strategy to destabilize us, drive up prices and divide us. We will not allow this.

A bill providing the legal basis for burning more coal for power generation is making its way through the Bundestag and is expected to come into force shortly after discussions in the upper house scheduled for July 8.

In Austria, state-controlled Verbund AG received orders on Sunday evening to commission its mothballed Mellach coal-fired power plant.

The plant – 200km south of Vienna – was closed two years ago in a move that at the time made Austria the second European country to phase out coal entirely from its electrical network.

Reviving coal is “bitter, but it’s just necessary in this situation to reduce gas consumption,” Habeck said. “We must and we will do everything we can to store as much gas as possible in summer and autumn.”

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