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Will Russian natural gas put an end to the era of coal in Europe?

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Фото © OMV AG

On July 5th, head of Gazprom PJSC, Alexey Miller, and head of OMV AG, Rainer Seele, signed an agreement prolonging the current contract for export of Russian natural gas to Austria until 2040. The extention of the contract was timed to the 50th anniversary of supplying Russian "blue fuel" to this country.

In just half a century, Austria imported more than 218 billion cubic meters of gas, and in 2017, a historic peak of supply volume was recorded at 9.1 billion cubic meters, which is one and a half times higher than 2016 (6.1 billion cubic meters), and a third higher than the previous record, set in 2005.

"Extension of this agreement for gas supplies will allow us to provide Austria and other European countries with natural gas, despite the growing demand. Moreover, it will help reduce CO2 emissions," commented Rainer Seele.

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Фото © www.gazprom.ru

One of the reasons why Austrians are interested in increasing import of natural gas from Russia is the reduction of coal generation. Over recent years, it has been consistently decreasing. In 2015, there were only three coal-fired power plants in Austria with a total capacity of 792 MW. In 2016, the Riedersbach power station with a capacity of 168 MW was closed, as well as one power unit of the Dürnrohr power station. The second one is about to be decommissioned by 2025. And the other - Mellah TPP will cease its work earlier by 2020.

Many countries in Europe such as Belgium, Portugal, Denmark, Finland, Sweden, France, Great Britain and others are headed towards abandoning coal generation. The reasons are obvious. Coal is considered the dirtiest source of energy; when it is burned, a lot of carbon dioxide and other substances harmful to human health are released into the atmosphere.

"The situation is very simple. The era of coal business has ended, at least in Germany. Due to this, we even came up with a new course for our students called “Post Mining”. We teach students what energy sources will be in demand after coal is finally displaced by other resources. Our task is to look to the future, to focus on the processes that are linked to saving the environment and improving the ecology. There is a lot of pollution and infringement on the landscape; that is why we need future engineers to be able to solve these problems," says Marcus Plien, a professor at the TH Georg Agricola University of Applied Sciences (Bochum, Germany).

However, not everything is that certain. Many developing countries continue to increase consumption of “black gold” or merely show reluctance reducing it. In China, India, South Africa, relatively cheap coal generation provides much more than 50% of the total energy consumption. It is also high in some European countries. For example, in 2015, the share of coal in electricity production in Bulgaria was 45.9%, in Romania – 26.9%, and in Poland, it exceeded 80%.

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Фото © www.suek.ru

In total, there are more than 300 power plants in the EU with 738 coal-fired power units operating on them. The prospects of closing most of them are quite vague for various reasons. Firstly, multi-billion investments are required in order to give up coal, and those are not so easy to find. Secondly, the elimination of the coal mining industry, which is highly developed in some European countries, may lead to negative economic and social consequences. But the main reason is, in the Old World, there are simply no alternative generating capacities due some states abandoning nuclear energy, while development of renewable sources is not happening fast enough.

It was announced this spring that Czech businessman Pavel Tykach is going to invest about a billion euro of his own funds in aging coal-fired power stations throughout Europe. It would seem a risky move, but concerning the above-mentioned, such decision looks quite logical.

"Solar and wind energy are flooding the European network, but will need to make up for the power shortage when the sun does not shine and the wind does not blow. This situation can last for other two or three decades. Therefore, the negative media bubble around coal generation does not reflect reality," believes Tykach, who plans to strike the first deal at the end of 2018.

Thanks to new technologies, modern coal-fired power plants have become much more environmentally friendly than before. In order to cause as little damage as possible to the environment and preserve health of the local population different methods are used during construction. For example, increasing pipes’ height ensures better dispersion of pollutants and decreases their concentration in the air, while replacing battery cyclone collectors with modern electrostatic precipitators reduces emissions of dust and particulate matter by 80%.

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Фото © sibgenco.ru

Yet most experts from the EU believe that the most efficient "energy mix" is not RES (renewable power sources) and coal, but RES and gas. That is why the Europeans, despite resistance of the US, uphold their right to carry out the Nord Stream 2 project with Russia.

"The share of renewable energy sources in the German market is constantly growing. Today, we produce about 30% of electricity from the RES. In the near future, I believe, renewable energy sources and natural gas can jointly cover the entire demand of German consumers for energy supplies. Of course, this task cannot be solved only at the expense of wind generators and solar panels due to imperfect energy storage technologies and the inability of RES to provide generation during peaking loads. That is why we believe that the future of our energy balance is in the cooperation of "green energy" and natural gas," – says Jörg Leuwitz, the leading specialist of the Verbundnetz Gas company (Germany).

Neighboring Austria, which was the first country in Western Europe to sign a gas deal with the Soviet Union, agrees with Mr. Leuwitz. The initial supply in 1968 was only 142 million cubic meters. In 50 years, it has increased more than 64 times.

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Фото © OMV AG

На фото: 1968 год. Первый газ из СССР в Баумгартене (Австрия)

The head of OMV AG, Rainer Seele, after prolonging the contract with Gazprom, noted that Russia "had proven itself as a reliable gas exporter, who always responded promptly to the needs of the Austrian market and, in times of sharply increasing demand, delivered gas in volumes needed for the consumers." In addition, he mentioned that due to a decline in domestic production in Europe, the importance of creating new gas transmission capacities, such as the Nord Stream 2, is growing significantly.

Meanwhile, it is difficult to say what will end the confrontation between coal and gas in the EU. But it is obvious that in the next thirty years the world as a whole and Europe in particular, will not be able to abandon fossil fuels entirely. Hydrocarbons will retain their dominance in the world energy mix. According to forecasts, their share will be about 50% by 2050, meaning that generation of oil, coal, and gas will remain practically at the current level, considering constant growth of energy consumption.