(Dan Tri) – Europe has agreed to ban Russian coal, but is still in a `dilemma` in the final decision to ban oil and gas, despite facing increasing pressure after recent events.
A coal ship in Yekaterinburg, Russia (Photo: NYT).
European Union (EU) countries on April 7 agreed to ban Russian coal imports, marking the first time sanctions have targeted this important sensitive energy sector.
However, the 27 EU countries still cannot agree on a more extensive embargo targeting Russian oil and natural gas.
The EU’s executive commission said the coal ban would cost Russia 4 billion euros ($4.4 billion) a year.
This move marked a breaking of the taboo about severing Europe’s energy ties with Russia.
But compared to natural gas and oil, so far, coal is a `weapon` that is too small and causes much less damage in the `strategic weapons` arsenal of Russian President Vladimir Putin and the economy.
The EU only pays Russia $20 million a day to buy coal but spends up to $850 million a day on oil and gas.
It is European countries that are facing difficulties
EU countries, especially large economies such as Italy and Germany, rely heavily on Russian natural gas, especially during a cold winter.
However, Italian Prime Minister Mario Draghi said that the fighting in Ukraine is becoming more terrible as this alliance seems to be gradually running out of `weapons` to weaken Russia, to stop Russia.
Currently, even the coal ban has worrying consequences for politicians and citizens.
`The coal ban means European consumers will have to bear the brunt of high electricity prices throughout this year,` according to a statement from Rystad Energy.
Europe has been facing high energy prices for months due to limited supply, and concerns about the war in Ukraine.
Governments have been rolling out cash assistance and tax breaks to affected people.
Commodities analyst Barbara Lambrecht at German bank Commerzbank said EU governments could agree on a coal embargo because the embargo would take effect after three months and only apply to new contracts.
In fact, European coal futures prices skyrocketed after the EU announced a proposal to ban coal from Russia, from about 255 USD/ton to 290 USD/ton.
The most intense fight still centers on oil and natural gas, with the EU depending on Russia for 40% of its gas and 25% of its oil.
However, European Council President Charles Michel said: `I believe that sooner or later sanctions on oil and even gas will be needed.`
The EU’s plan is to cut its dependence on Russian gas by two-thirds by the end of this year and completely over the next few years by increasing alternative supplies, conservation, and wind and solar power.
Germany has reduced its dependence on Russian natural gas from 55% to 40%, but the government says the consequences of this will be huge.