As natural gas prices soared in European countries, more and more power companies returned to coal-fired power generation with higher carbon emissions, though this runs contrary to the active de-carbon stance of the European region.
The shift came as the growth of coal prices was far smaller than that of natural gas prices, letting cost effectiveness of coal-fired power to recur.
Since the beginning of this year until now, carbon price under the EU carbon emissions trading system (ETS) has almost doubled, and the price of coal futures in Europe market has more than tripled. Yet, natural gas prices in Netherlands have skyrocketed by 3 times than early this year.
Under the upcoming COP26 UN climate negotiations in November, the EU has been encouraging other major carbon-emitting countries to set more ambitious climate objectives and get away from coal-fired power.
The ETS is the main tool for controlling greenhouse gas emissions in EU through charging power plants and factories at per tonne of carbon dioxide emissions.
Owing to climbing cost of carbon emissions, the operating cost of natural gas-fired power plants was lower than that of coal-fired plants, but this has changed from July this year after natural gas prices continued picking up.
Although coal-fired power generation in Europe was restricted by the rise in carbon prices, the surge in natural gas prices in Netherlands would continue driving gas-fired generation to change to coal-fired power generation, said an US bank analyst, quoted by Reuters.
In the third quarter of this year, German burned hard coal and lignite to generate 35.1 TWh of power, much higher than 28 TWh in the second quarter and 29.3 TWh in the third quarter of last year, data showed.
Silvia Messa, an analyst from Volue, an energy consulting company, forecast that in the next few quarters, the advantages of power generated by hard coal and lignite would keep higher than natural gas-fired power in the European energy mix.
(Writing by Shengnan Liu Editing by Tammy Yang)
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