Europe is taking a big gamble as it moves to ban Russian coal, potentially leaving itself vulnerable to shortages and rolling blackouts while the rest of the world contends with surging prices.
Russia is Europe’s top supplier of thermal coal, used to fuel power stations. As the European Union joins the U.S. to take a harder stance against Russian President Vladimir Putin’s war in Ukraine, the continent has plans to phase out Russian shipments. The problem is that there’s no clear alternative for that huge chunk of trade, and the result appears destined to lead to a domino effect that creates a mad global scramble for coal.
Prices are already soaring in a market that has been tight for months. European coal jumped 14% to a three-week high on Tuesday after news of the proposed ban, with futures doubling since the start of the year. The benchmark for Asian coal hit an all-time high in March, while U.S. coal topped $100 a ton last week for the first time in 13 years.