European Union proposes ban on Russian coal in new sanctions over Ukraine war
The European Union’s executive branch Tuesday proposed a ban on coal imports from Russia in what would be the first EU sanctions to target the country’s lucrative energy industry over its war in Ukraine.
European Commission President Ursula von der Leyen said the EU needed to increase the pressure on Russian President Vladimir Putin after what she described as “heinous crimes” carried out around the Ukrainian capital, Kyiv, where evidence suggests that Russian troops deliberately killed Ukrainian civilians.
Von der Leyen said that Russian coal imports into the EU are worth $4.4 billion a year and that the EU has already started working on additional sanctions, including on oil imports.
She didn’t mention natural gas, a tacit acknowledgment of the consensus among EU countries that a ban on the fuel used to generate electricity and heat homes would be hard to secure amid opposition from nations like gas-dependent Germany, the bloc’s largest economy.
Until now, Europe had not been willing to target Russian energy over fears that it would plunge the European economy into recession. Europe’s dependence on Russian oil, natural gas and coal means that achieving unanimity on energy sanctions is a tall order, but the recent reports of civilian killings in Ukraine have increased pressure for tougher EU measures.
The U.S. and Britain previously announced that they were cutting off Russian oil. Individual EU countries have also announced efforts to diminish their energy reliance on Russia: Poland says it plans to block imports of coal and oil from the country, while Lithuania said it’s no longer using Russian natural gas.
German officials say their economy would spiral into recession if they stop purchasing Russian energy.
“To take a clear stand is not only crucial for us in Europe but also for the rest of the world,” Von der Leyen said. “A clear stand against Putin’s war of choice. A clear stand against the massacre of civilians. And a clear stand against the violation of the fundamental principles of the world order.”
Energy policy expert Simone Tagliapietra with the Bruegel think tank in Brussels said coal represented $22 million per day in revenue for Russia from Europe at current prices, compared with $935 million per day for oil and gas.
The coal ban “is important because it breaks the energy taboo,” he said, but it is not “a game changer. ... Targeting coal for the moment is too prudent. It’s too symbolic, and the time for symbolic measures is gone.
“It’s not with coal that Putin can get rich or sustain the funding of the war. The big flow of money is certainly oil and gas, not coal, and that’s the issue.”
Halting certification of the gas pipeline is the strongest economic action from the West so far in the escalating crisis over Ukraine.
The proposal still must be adopted unanimously by all 27 EU countries and is included among a new package of sanctions.
Other measures proposed by the EU’s executive arm include sanctions on more individuals and four key Russian banks, including VTB, the second-largest Russian bank.
“These four banks, which we now totally cut off from the markets, represent 23% of market share in the Russian banking sector,” Von der Leyen said. “This will further weaken Russia´s financial system.”
The bloc also would ban Russian vessels and Russian-operated vessels from EU ports, with exceptions for essentials such as agricultural and food products, humanitarian aid and energy.
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Further targeted export bans, worth $11 billion, in sectors covering quantum computers, advanced semiconductors, sensitive machinery and transportation equipment, also were 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 Russia’s exports to the EU were hydrocarbons last year.
“If we really want to affect Russia’s economy, that’s where we need to look,” he said. “And that’s exactly what is subject to discussions concerning this sanctions package.”
Tens of thousands of Russians want no part of Putin’s war. But forging a new life in exile isn’t easy.
In pursuing its climate goals, the EU has been moving away from coal for years. Coal use fell from 1.2 billion tons in 1990 to 427 million tons in 2020, but imports rose from 30% to 60% of coal use.
Russian coal would be easier to replace than natural gas because coal comes by ship and there are multiple global suppliers. Germany’s association of coal importers said last month that Russian coal could be replaced “in a few months.”
But the switch would mean more import demand from Europe and higher global coal prices, with significant effects on emerging and developed economies that also rely on coal.
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