Dutch Are Reviving Coal Power Amid Russian Gas Squeeze

(Bloomberg) -- The Netherlands removed any limits on power production from coal-fired plants to help ensure energy security, joining other European countries in turning to the heavily polluting fossil fuel to stave off potential shortages of Russian natural gas.

The Cabinet will immediately change a law that forced coal-fired power stations to operate at a maximum 35% of capacity in order to limit carbon-dioxide emissions, Climate and Energy Minister Rob Jetten said during a press conference Monday in The Hague. The plants now can operate at full capacity through 2024.

“Without additional measures, it is no longer guaranteed that we, in Europe and the Netherlands, will be able to fill the gas storage facilities sufficiently in preparation for the winter,” Jetten said.

The decision comes amid similar moves by the German and Austrian governments, which revived coal production in response to a cut in Russian gas supplies. Moscow slashed deliveries through the Nord Stream pipeline to just 40% of capacity, an apparent retaliation over Europe’s support for Ukraine.

The capacity limit for three coal-fired power plants in the Netherlands only started Jan. 1, with the hopes of ending their production by 2030. The government said Monday the plants now will be allowed to produce at full capacity, “reducing the risk of gas shortages and making it easier to fill the gas storage facilities in the Netherlands and Europe.”

“We had to make difficult choices,” Jetten said.

Prime Minister Mark Rutte’s government also unveiled an “early warning” system for gas security, making it mandatory for companies to share detailed information about supplies on a daily basis.

The nation turned to coal rather than increasing production at the controversial Groningen gas field, as a group of energy advisers advocated. The field has been a key source for much of Western Europe, as well as being the backbone of Dutch sovereign finances, since production started in 1963.

The government plans to close Groningen in October 2023 -- “if the geopolitical situation permits” -- after nearby towns were damaged by hundreds of earthquakes triggered by drilling. The field’s output this year may be slightly less than the previously announced 4.5 billion cubic meters because of warm weather and heavier usage of nitrogen facilities, the government said.

European natural gas prices rose further Monday after rallying 43% last week, with governments across the continent going on high alert amid a mounting possibility of rationing. Shipments to top buyers in Germany, Italy and France have been curbed, prompting the European Commission to say Russia is using its energy for “blackmail.”

Dutch front-month gas futures, the European benchmark, settled 2.5% higher at 120.63 euros per megawatt-hour in Amsterdam. The UK equivalent slipped 0.5% to 200.84 pence a therm.

Leaders of Italy and Germany -- who traveled to Kyiv last week just as Gazprom PJSC was tightening its grip on European supply -- also have accused Moscow of deliberately cutting out shipments. The Kremlin said Russia has enough gas and is ready to supply the European Union, but the Nord Stream turbines have to be returned after maintenance.

(Updates with details on Groningen production, gas prices beginning in the eighth paragraph.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.