Europeans are preparing to include coal in sanctions against Russia. But it seems easier for the European Union to give up this fossil fuel, or even Russian oil, than gas, a much more sensitive issue.
Income for Russia
Russia is a hydrocarbon giant, and oil and gas revenues funded 45% of the federal budget last yearaccording to the International Energy Agency (IEA).
Ukrainian President Volodymyr Zelenskyy called on the EU to stop buying so that “Russia has no more money for this war”.
According to US statistics Russia exported 5 million barrels of oil per day (mbd) in 2020, half of it to European countries (especially Germany, Netherlands, Poland).
The United States, a major energy producer, has imposed an embargo. But Europe is only thinking about coal for the time being, although it says it wants to reduce its gas purchases by two-thirds this year.
carbon, interchangeable
According to BP’s annual energy report, Russia holds 15% of the world’s coal reserves. It secures 45% of EU imports, with particularly dependent countries like Germany and Poland.
The trend in the EU is to phase out coal, which is very harmful to the environment. Its consumption has fallen, but at the same time Europeans have closed mines and are increasingly dependent on imports, according to the Bruegel Institute.
For example, in the case of coal, EU purchases from Russia thus increased from 8 million tonnes in 1990 (7% of imports) to 43 million tonnes in 2020 (54%).
But Germany intends to do without Russian coal from next autumn.
“Russian coal can be substituted because the global coal markets are well supplied and flexible,” according to the Bruegel Institute.
oil, possible
Russia, one of the world’s largest oil exporters, supplies more than 25% of the EU’s crude oil, according to European statistics.
“In principle, it would be easier to replace Russian oil than gas‘ as imports arrive by ship and not via fixed infrastructure such as gas pipelines, Bruegel states.
But Russia also exports 1.5 million barrels of diesel a day, on which Europe is heavily dependent. “It’s going to be a real problem for diesel,” warned Barbara Pompili, French minister for the green transition, who is securing the interim EU presidency.
In the event of an embargo, other sources of diesel would have to be sought in addition to oil.
Accelerate, the most difficult thing
Russia exports directly to Europe thanks to a network of gas pipelines. With 155,000 million cubic meters per year, Russia accounts for 45% of gas imports and about 40% of EU consumption.
The question of a possible embargo is dividing European countries as some are heavily dependent, like Germany, which gets 55% of its gas from Russia.
“Russian gas supplies are irreplaceable” and disrupting them “would hurt us more than Russia‘ argued Federal Finance Minister Christian Lindner on Monday.
According to Eurostat, ten countries (Bulgaria, Czech Republic, Estonia, Latvia, Hungary, Austria, Romania, Slovenia, Slovakia, Finland) were more than 75% dependent on Russian gas last year.
The Baltic states stopped importing Russian gas in early April and are using their reserves.
But without Russian gas, Europe would struggle to have enough reserves for the coming boreal winter.
According to experts, the route to other suppliers in the form of liquefied natural gas (LNG), which arrives by ship, would only partially compensate for the loss of Russian gas. It would also be necessary to reduce consumption and limit the production of certain industries.
An embargo on Russian energy – including gas – would cost Germany between 0.3% and 3% of GDP, the French Council for Economic Analysis has just calculated. And “Lithuania, Bulgaria, Slovakia, Finland or the Czech Republic could lose revenue between 1% and 5% of GDP,” he estimates.
*With information from AFP.
As this is news of global interest, all content related to the conflict between Russia and Ukraine will be freely available to our readers on all SEMANA digital platforms.