Macroscope | Russian gas cuts to Europe are pushing Germany towards Asian coal, but the demand won’t last
- Europe’s gas shortages have forced Germany to bring its old coal plants out of retirement, presenting an opportunity for Asian suppliers
- However, the move is only a temporary setback to plans to phase out coal entirely, while the drive towards renewables has gained pace
Russian President Vladimir Putin’s gas blackmail has left Europe with few options. If your gas supply is cut, resorting to burning coal is preferable to the lights going out.
Asia might see this as an opportunity to capitalise, especially coal-producing countries. Indonesia’s Ministry of Energy and Mineral Resources recently revealed a plan to increase its coal production target following a request from Germany to buy up to 150 million tonnes of coal from Indonesia this year. As one of the world’s largest exporters of liquefied natural gas (LNG), Indonesia is also considering efforts to allocate gas to Europe.
While it is understandable that Asia would seek to profit from the crisis, many Asian countries will also be detrimentally affected by Europe’s demand for global LNG supplies. And any profits from additional coal deliveries will be short-lived.
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Our analysis at Ember does not see Germany requiring the reported amounts of coal to compensate for Russian gas being cut off.