Brussels (Brussels Morning) Rising wholesale prices of natural gas in the EU are pushing utilities towards the use of coal amidst the bloc’s green push.
Energy price hikes are encouraging utilities to switch from gas to coal, which pollutes more, in order to generate electricity as prices for gas, coal and carbon permits are rising, Reuters reported on Tuesday.
The cost of coal and carbon permits has risen by a lot less than for natural gas, which means that coal is more profitable when it comes to generating electricity.
Carbon permit prices have nearly doubled since the start of the year, while coal futures more than doubled. Wholesale Dutch gas prices have almost quadrupled in the same period.
The EU has been adopting more and more ambitious environmental goals over the last years as well as pushing its members and other countries to move away from coal at a quicker pace.
Coal more profitable again
Thanks to the introduction of carbon permits, generating electricity in the EU using gas had been cheaper for over two years, but around July last, this flipped in favour of coal.
In Britain, soaring natural gas prices have prompted a switch to oil as the country prepares to secure electricity supplies for the winter.
German utilities have turned back to coal after the reversal, with use of lignite rising as natural gas prices shoot up.
According to data from the German Fraunhofer Institute for Solar Energy Systems ISE, use of coal for power generation in the country accounted for 35.1 TWh in the third quarter, compared to 28 TWh in the second.
Silvia Messa, senior analyst at the Norwegian Volue energy consultancy, pointed out that coal is expected to remain more profitable for power generation in the coming quarters.
The Ember environmental organisation’s electricity analyst pointed out “the electricity transition is happening but not with the urgency required: emissions are going in the wrong direction.”