FAQ
Status: 08/11/2022 06:18 a.m
As of today, no more Russian coal may be delivered to the European Union. What are the consequences? How did German importers react to this? And how hard is the punitive measure against Russia?
As of today, EU countries are no longer allowed to import coal from Russia. The coal embargo against Russia, which the member states of the European Union decided in April as part of the fifth sanctions package, is now fully effective after a transitional period. Answers to some questions.
Why did this transition period apply?
In April, the EU countries agreed on a 120-day transition period so that industry and importers could adapt to the import ban. During this period, coal importers in Europe were granted exceptions: deliveries from contracts concluded before April 9th were allowed to be imported.
However, new contracts were not allowed to be concluded. This transitional arrangement expired at midnight today and the embargo will come into full effect.
What is the aim of the coal embargo?
The aim of the import ban is to further weaken the Russian economy. According to the EU Commission, the import ban could mean around eight billion euros less revenue for Russia each year. Coal was the first fossil fuel that the EU included on the sanctions list. The corresponding package was approved in April.
In the meantime, the EU Commission has also decided on sanctions for Russian oil. However, this import ban will only apply from the end of this year. And some particularly dependent countries like Hungary are exempt from the oil embargo. Since the start of Russia’s war of aggression against Ukraine, the EU has issued several packages of sanctions to weaken Russia economically and financially.
How strong is this sanction?
In the face of Western sanctions, Russia now exports a large part of its coal to India. The country has become India’s third largest supplier of coal, with imports up more than 70 percent between June and July. Because no additional infrastructure is required to transport the coal, the deliveries can simply be diverted.
Some experts regard the embargo on Russian coal as more of a symbolic act. “As an export commodity, coal is basically completely irrelevant for Russia, and the EU as a buyer also plays a subordinate role for Russia,” said Janis Kluge, Russia expert at the Stiftung Wissenschaft und Politik, in April in conversation with tagesschau.de. Last year, Russia exported coal worth about four billion euros to the European Union.
What does the embargo mean for the German economy?
Russian hard coal was used in Germany as a fuel for power plants and in industry. This hard coal requirement of the power plants can be replaced by lignite. The hard coal required in industry is imported from other parts of the world.
The remaining power plants have already been converted to other coal, according to Alexander Bethe from the Association of Coal Importers (VdKi): “The switch to alternative coal has been relatively easy so far.” Some power plants are still in test mode as far as the new composition of the coal-fuel mix is concerned. They would be switched in September.
Are there delivery bottlenecks now?
Despite the import ban, German coal importers are not expecting delivery bottlenecks, even though according to VdKi almost 50 percent of hard coal and coke imports came from Russia last year. “Coal is available on the world market,” says Bethe.
Besides Russia, Indonesia and Australia are important coal exporters. But the USA, South Africa and Colombia could also meet the needs of the European Union.