I am still attempting to make sense out of this story, reported by William Boston at the Wall Street Journal via MarketWatch:
BERLIN—Germany will restart coal-fired power plants and offer incentives for companies to curb natural gas consumption, marking a new step in the economic war between Europe and Russia.
Berlin unveiled the measures Sunday after Russia cut gas supplies to Europe last week as it punched back against European sanctions and military support for Ukraine.
The steps, part of a broader strategy initiated after the invasion of Ukraine, aim to reduce gas consumption and divert gas deliveries to storage facilities to ensure that the country has enough reserves to get through the winter.
Russia’s gradual cutting of gas supplies has raised the specter of a potential fuel shortage if Europe goes into winter with less-than-full stowages. It has also raised prices, putting additional pressure on economies that are already struggling with high inflation and rising borrowing costs and face the prospect of a recession.
Why am I puzzled? Germany imports all of the coal it uses for energy production, half of it from Russia. So if Russia cuts back on its shipments of gas or oil to Germany, the Germans plan to replace it with Russian coal?
I don’t see how that makes any sense at all. It doesn’t make sense from a carbon emissions standpoint. It would mean that Germany continues to finance Russia’s war against Ukraine so it doesn’t make any sense from an opposition to the war standpoint. The price of coal rose after Russia’s invasion of Ukraine, too, so it doesn’t make a great deal of economic sense. It’s just barely possible it makes sense from an arbitrage standpoint since the prices of oil, gas, and coal don’t rise in perfect lockstep but that’s pretty cynical. Could that be the plan?
Do they have more confidence in their ability to import all of the coal they need from the United States and Australia? Cue President Biden’s announcement of the end of coal-mining.
Or does it just not make any sense?