AP

European Union proposes Russian coal ban in new sanctions

Apr 5, 2022, 2:59 AM | Updated: Apr 6, 2022, 2:47 am

BRUSSELS (AP) — The European Union’s executive branch proposed Tuesday a ban on coal imports from Russia in what would be the first EU sanctions targeting 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 Kyiv, with evidence that Russian troops may have deliberately killed Ukrainian civilians.

Von der Leyen said the ban on coal imports is worth 4 billion euros ($4.4 billion) per year and that the EU has already started working on additional sanctions, including on oil imports.

She didn’t mention natural gas, with consensus among the 27 EU countries on targeting the fuel used to generate electricity and heat homes difficult to secure amid opposition from gas-dependent members like 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 finding unanimity on energy measures is a tall order, but the recent reports of civilian killings have increased pressure for tougher EU sanctions.

The U.S. and United Kingdom previously announced they were cutting off Russian oil. Individual EU countries have announced efforts to draw down 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.

“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 20 million euros in revenue for Russia from Europe per day at current prices, compared with 850 million per day for oil and gas.

The coal ban “is important because it breaks the energy taboo,” he said, but 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.”

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, among them 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.

Further targeted export bans, worth 10 billion euros, 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.”

Because of its climate ambitions, the EU has been moving away from coal for years. Coal use fell from 1.2 billion tons a year to 427 million tons between 1990 and 2020, but imports rose from 30% to 60% of coal use.

The European Union imported 53% of hard coal from Russia in 2020, which accounted for 30% of the EU’s hard coal consumption.

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.

___

AP journalist Barry Hatton in Lisbon, Portugal, contributed to this story.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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European Union proposes Russian coal ban in new sanctions