Switching to coal has not proved an effective tactic for easing the current energy squeeze, as its price has rocketed to a record $450-460 per tonne (up 185.9% YTD and 152.9% y-o-y), while its consumer base is getting bigger and the share in Europe’s power generation mix rose to 16.4% in January-August 2022 from 14.1% a year earlier. Those countries which earlier decided to gradually phase out coal generation now have to backtrack on their plans and are looking to extend the life of coal mines and coal-fired power plants (e.g., Norway has extended production at its last mine in the Arctic Svalbard archipelago by two years rather than shutting it down next year as was previously planned
With more coal being burnt to generate electricity, emissions are now on the rise (coal accounted for over 40% of the overall growth in global CO2 emissions in 2021
). This puts additional pressure on European producers, as they have to pay more for carbon permits. European carbon prices hit a record €98 per tonne of СО2 equivalent in mid-August (see Fig. 3) and now remain high, despite falling from their peak to €70 per tonne by the beginning of this month, ahead of the upcoming meeting of EU energy ministers on 9 September.
In the first eight months of 2022, EU carbon permits appreciated 79.1% y-o-y, from €46.8 to €83.9 per tonne.