Gas supply risks push European emissions up
Annual power emissions summary for January to September
Profitable coal generation and increased coal burn have resulted in higher power sector emissions in Europe, a bullish driver for EU carbon. Dark spreads (the profit margin for coal) have remained largely in the money, while spark spreads (the profit margin for gas) have sunk below zero. Coal-fired power plants have been benefitting from high power prices and reduced profit dilution from high gas prices.
Average clean brown, dark and spark spreads in Northwest Europe
Coal generation has been limited by capacity constraints due to coal phase-outs across Europe and sanctions on coal imports from Russia. However, the EU’s ‘Save Gas for a Safe Winter’ plan, which outlines fuel substitution as one of the ways to meet the 15% gas demand reduction target, is easing the capacity constraints as coal plants are brought back online. Germany has already reopened some of its mothballed coal capacity.
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