Today the world is talking about renewables, hydrogen, green life, etc. But I will raise a question, which is not in the same trend.

Is there a Future for Coal?

Today, as the direct consequences of the Russia - Ukraine war , we can see two major crises : 

1. Food crisis resulting from stopping the export of grains from Russia and Ukraine

Together, Russia and Ukraine export represent nearly one-third of the world's wheat and barley, more than 70% of its sunflower oil and are prominent suppliers of corn. Russia is the top global fertilizer producer. 

2. Energy Crisis resulting from the sanctions imposed by the US and EU on oil and gas exports from Russia resulted in the challenges in oil and gas supply, especially to Europe. 

Let's look at Russia's energy exports before the Russian-Ukraine war.

 

Oil

Russia has been supplying about a quarter of the oil EU countries import. That is about 2.2 million barrels per day of crude oil and 1.2 million barrels of oil products. According to the Carnegie Endowment, a US think tank; this has been earning Russia more than $1bn (£800m) a day.

The below chart shows the distribution of oil imports by EU countries from Russia, based on the total oil imported per country. 

The EU plans to ban Russian oil imports arriving by sea. by the end of this year. This would cut EU nation's oil imports from Russia by two-thirds. The EU will continue to allow 800,000 bpd of oil imports brought in by pipeline as a "temporary measure." However, EU countries can always buy oil from other producers. 

Where will the EU compensate for the shortage of oil? 

For oil producers like KSA, GCC, Venezuela, Libya, Algeria, Nigeria, USA, etc., the transportation of oil and logistics will be costlier.

 

Gas

Russia supplies the EU with 40% of the natural gas it imports. In March, the EU committed to reducing gas imports from Russia by two-thirds within a year. Germany, Europe's largest economy, relies on Russia for almost half of its gas supply.

EU nations will be able to find other gas suppliers like Russia. "It would have to turn to natural gas  producers such the US and Qatar, Algeria, (Egypt + Israel newly signed MOU with EU) which would ship liquefied natural gas (LNG) in tankers. 

But there aren't enough LNG terminals in Europe to receive such a massive amount of LNG for gasification and redistribution to EU countries. 

We can see that, the Russian-Ukraine  war made a big miss in oil and gas supplies worldwide and in Europe especially and raises a question about the security of energy in the EU –and we are not yet in winter, when energy will become a life need.

 

Coal

The second half of 2021 has seen significant increase in the prices of natural gas, prompting substantial switching to coal for generation of electricity in the major markets, including the United States, Europe, and Asia, and driving up CO2 emissions globally.

However, in the Net Zero Emissions by 2050 Scenario, coal-fired power generation will completely phase out by 2040.

The consequences of the Russia – Ukraine war and associated risks raised the supply of Russian Oil and Gas, and this led to increase in Oil and Gas prices which in turn led the coal-fired power plants in countries like Germany, Austria, and Holland to restart. A necessity with the expectation that other countries will follow the same direction. 

Will the energy consumption   and  energy shortage affect the view of Zero-emission by 2050, as shown in the chart above, and give a boost to coal as a reliable fuel to support energy security?

The answer will be based on the development of the Russia - Ukraine war in the coming few months.

 

This article was contributed by our expert Hossam Morsi

 

Frequently Asked Questions Answered by Hossam Morsi

Q1. What the war in Ukraine means for energy, climate, and food?

The Russia – Ukraine war resulted in an energy crisis. As a result of the war, US & Western countries imposed sanctions on Oil and gas exports and directly affected the oil & gas supplies and prices to reach very high levels (Above 100 USD/ B). 

For food, the war affected the exports of wheat and corn from Russia and Ukraine (Almost 40% of world exports come from both countries) due to the interruption of maritime export in the black sea due to operations. 

 

Q2. How has the conflict in Ukraine affected the energy supply to Europe?

Europe has imposed sanctions on the Russian Oil & gas industry, and exports to Europe have been affected negatively. 

 

Q3. Will the Ukraine war revitalize coal – the world’s dirtiest fossil fuel?

As in the article, we see today that some European countries like Germany, Austria, and Holland, restarted coal power plants again to compensate for the shortage of oil & gas received from Russia. The final word is not yet said. 

 

Q4. How does the Russia Ukraine war affect the global economy?

Increasing food and energy prices, as well as affecting the supply of industrial components, which leads to price increases in total manufacturing cost, has driven the world economy toward a possible recession.