More coal to gas switching in Europe?

(Montel) Greater gas supply diversification could help lower prices and prevent more widespread switching to coal-fired plants, the CEO of Austrian energy firm OMV said on Tuesday.

“Unfortunately, we have seen fuel switching in 2022 to fuels with less favourable CO2 emissions intensity because of tight gas supply and high prices,” Alfred Stern said at an industry event in Vienna.

“By diversifying our sources and making it more affordable, we will contribute to reversing this trend,” he said.

Efforts to replace drastically reduced Russian supply in the wake of the country’s invasion of Ukraine last February saw benchmark front-month TTF prices surge to an average of EUR 133/MWh last year, compared with EUR 48/MWh in 2021.

The lofty prices encouraged switching to coal-fired generation but prices have since declined to around EUR 40/MWh – amid ample supply from an increasing variety of origins and softening demand – again making gas more attractive as a generation fuel for utilities.

Bridging fuel
With gas set to play a “key role” as a bridging technology in Europe’s decarbonisation efforts, “due to its favourable CO2 emission intensity performance”, it was crucial to decarbonise production and supply chains, Stern said.

“This means we have to increase energy efficiency in the production and transportation of gas,” he said.

“There’s absolutely no doubt that the energy transition must be accelerated.

However, we also have to accept that there is no [quick] switch that can replace fossil fuels,” he said.

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