Like several other European Union countries, Germany is turning back to coal to generate power as the winter fast approaches. Before Russia invaded Ukraine, Germany and several other countries across the EU had been working to shut down their coal-fired power plants in favor of greener options such as solar and wind power. However, Germany is now actively working to build its coal stockpiles as the global energy crunch gets worse amid worsening economic conditions and a fast-approaching winter.
The Russian-Ukraine war has led to one of the worst energy crises in Europe and the world at large in decades. Soon after the Kremlin invaded Ukraine, several Western countries issued sanctions against Russia to slow its economy and harm its war effort in Ukraine.
The fallout from these sanctions has been devastating; Russia cut gas supplies to the rest of Europe, inevitably leading to an energy supply crunch that forced European countries such as Germany to go back to the drawing board and re-examine their energy mix.
In the industrial area of North Rhine-Westphalia, German utility Marl Chemical Park is slated to keep running throughout the winter. The power plant was scheduled to shut down by the end of 2022 but will continue running instead, maintaining more than 10,000 jobs and generating energy for companies on the site.
The extension of Marl Chemical Park’s life is a clear indication of the energy crunch that has gripped Germany in its clutches for the past couple of months.
Other governments and companies across Europe are hastening to develop contingency measures to ensure their grids continue supplying power to citizens over the cold winter.
Although coal is among the dirtiest fuels on the planet, it is in abundance, and plenty of European countries already have the infrastructure needed to generate power via coal. Germany’s strategy has been to halt the shutdowns of several coal-fired power plants and extend the lives of the facilities.
Germany has also opted to keep three of its remaining nuclear power plants operational until mid-April next year. These nuclear plants were slated to close by the end of the year but will be allowed to keep running for a few more months to supply extra energy to Germany’s grid over the coming cold months.
With winter almost upon us, European countries are scrambling to find an alternative to the cheap Russian gas that powered their grids for years. Harold Schwager, the deputy chair of German specialty company Evonik, noted that the ongoing power crisis is “very acute” and that the solution to the problem would be to increase energy supplies and reduce prices.
All this demand for coal at this time is creating a massive market for coal-extraction companies around the world, such as Alliance Resource Partners L.P. (NASDAQ: ARLP).
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