EU proposes Russian coal ban

BRUSSELS – The European Union executive on Tuesday proposed a ban on coal imports from Russia in what would be the first EU sanctions targeting the country’s lucrative energy industry over its war. in Ukraine.

European Commission President Ursula von der Leyen said the EU must step up pressure on Russian President Vladimir Putin after what she called “heinous crimes” around kyiv, with evidence that the Russian troops allegedly deliberately killed Ukrainian civilians.

Von der Leyen said the ban on coal imports was worth $4.4 billion a year and the EU had already started working on additional sanctions, including on oil imports.

She did not mention natural gas, with consensus among the 27 EU countries on targeting the fuel used to generate electricity and heat hard-to-secure homes amid opposition from dependent members of the gas like Germany, the largest economy in the bloc.

Until now, Europe has been unwilling to target Russian energy for fear it could push the European economy into recession. Europe’s reliance on Russian oil, natural gas and coal means finding unanimity on energy measures is a tall order, but recent reports of civilian killings have increased the pressure for tougher European sanctions.

The United States and the United Kingdom had previously announced that they were cutting Russian oil. Some EU countries have announced efforts to reduce their energy dependence on Russia: Poland has announced its intention to block the country’s coal and oil imports, while Lithuania has declared that it no longer used Russian natural gas.

“Taking a clear position is not only crucial for us in Europe but also for the rest of the world,” von der Leyen said. “A clear stance against Putin’s war of choice. A clear stance against the slaughter of civilians. And a clear stance against the violation of fundamental principles of world order.”

Energy policy expert Simone Tagliapietra of the Bruegel think tank in Brussels said coal accounts for $21.8 million in revenue for Russia from Europe per day at current prices, up from $926 million per day. for oil and gas.

The coal ban “is important because it breaks the energy taboo,” he said, but is “not a game-changer. … Targeting coal at the moment is too cautious, it’s too symbolic and time symbolic measures are over”.

“Coal is not the way Putin can get rich or support war funding. The big money flow is definitely oil and gas, not coal, and that’s the problem.”

The proposal has yet to be passed unanimously by all 27 EU countries and is part of a new sanctions package.

Other measures proposed by the EU executive include sanctions against more people and four key Russian banks, including VTB, Russia’s second-largest bank.

“These four banks, which we have now completely cut off from the markets, represent 23% market share in the Russian banking sector,” von der Leyen said. “This will further weaken the Russian financial system.”

The bloc would also ban Russian vessels and vessels operated by Russia from EU ports, except for essential goods such as agricultural and food products, humanitarian aid and energy.

New targeted export bans, worth $10.9 billion, in sectors covering quantum computers, advanced semiconductors, sensitive machinery and transportation equipment were also proposed.

“With this, we will continue to degrade Russia’s technological base and industrial capacity,” von der Leyen said.

But energy was the focus. EU Trade Commissioner Valdis Dombrovskis said 62% of Russian exports to the EU were hydrocarbons last year.

“If we really want to affect the Russian economy, that’s where we have to look,” he said. “And that’s exactly what is being discussed about this sanctions package.”

Due to its climate ambitions, the EU has been moving away from coal for years. Coal use has increased from 1.2 billion tonnes per year to 427 million tonnes between 1990 and 2020, but imports have increased from 30% to 60% of coal use.

The European Union imported 53% of Russia’s hard coal in 2020, which accounted for 30% of EU hard coal consumption.

Russian coal would be easier to substitute than natural gas because coal arrives by ship and there are multiple global suppliers. The German coal importers association said last month that Russian coal could be replaced “within a few months”.

But the change would mean greater import demand from Europe and higher global coal prices, with significant effects on emerging and developed economies that also rely on coal.

Information for this article was provided by Barry Hatton of The Associated Press.

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