Some European utilities have switched back to coal due to soaring wholesale gas prices and despite higher rising carbon prices. Benchmark carbon permit prices in Europe have nearly doubled since January, while European coal futures have risen by more than 100%. However, these lagged the spike in gas prices, which are nearly four times higher than at the beginning of the year.
This move strides against the European Union’s ambitious climate plans. The bloc has also urged other big polluters to accelerate energy transition ahead of the UN climate talks in Scotland in November. Data from Germany’s ISE Fraunhofer Institute showed brown and hard coals generated 35.1 TWh of electricity in the country in the third quarter of 2021, compared to 28 TWh in the prior quarter and 29.3 TWh a year earlier. In the UK, high gas prices also prompted a switch to crude oil.
Under the EU’s Emissions Trading System (ETS), coal-fired power plants are charged for each ton of CO2 they emit. This has made gas power plants cheaper to operate. However, that changed around July when gas prices began to increase. The ETS has been blamed for pushing up electricity costs. Some critics have also urged regulators to limit the impact of emission controls on the energy market.
