Europe faces energy threat as gas shunned for cheaper coal

THE Russia-Ukraine crisis has sparked fears of an energy challenge across Europe as countries opt to burn coal over natural gas.

Sadie Davidson

Nearly a third of gas capacity is at risk of shutting down, according to the recent report by the International Centre for National Gas Information.

“The current situation has the potential to unfold into a major structural crisis,” it warns.

The report was issued just as leaders were set to meet at European Union headquarters in Brussels this week to discuss energy security and climate change.

According to ICNGI, US shale gas production has increased the amount of coal on the global market, creating a supply surplus and slashing coal prices by more than 33% since mid-2011.

Meanwhile, natural gas prices increased by more than 40% between 2010 and the end of 2013 as demand in the EU steadily dropped during the period.

At current average prices, coal is about three times cheaper than natural gas on an energy equivalent basis.

However, EU air quality legislation is likely to shut down as many as a third of coal-fired power stations by 2020, most of which are likely to be replaced by renewable power alternatives such as wind and solar farms.

Despite the EU pledging to lead the global campaign against climate change, which aims to cut carbon emissions by 20% by 2020 compared to 1990 levels, it is yet to reach agreement on a 40% cut by 2030.

There are signs the EU may support conventional power sources for longer than originally anticipated.

A policy paper released by the European Commission urged the EU to provide funding to European makers of coal-fired power plants in order to ensure they could meet growing demand.

Although not an official policy, Reuters reported that most EU nations supported the idea.