High gas prices force European power generators back to coal

Surging European gas prices are forcing electricity producers across the continent to switch back to burning coal. Soaring wholesale natural gas costs have upended power generation economics, making coal-fired plants competitive again for utilities despite high carbon prices and official phase-out plans.

For European consumers and businesses, the shift exposes the persistent vulnerability of the continent's energy grid. While burning coal keeps the lights on and helps stabilize power supplies, coal generates roughly double the carbon dioxide of natural gas per megawatt-hour. This return to dirtier generation threatens to push up industrial emissions and make electricity generation more carbon-intensive just as winter approaches.

The retreat to coal presents an awkward reality for the European Union. The EU's climate architecture relies on a carefully calibrated economic incentive: charge power companies for their carbon emissions through the Emissions Trading System—the market where utilities must buy allowances for every tonne of carbon they pollute—so that cleaner fuels win automatically. When wholesale gas prices spike, however, market reality performs a swift step backward, forcing policymakers to watch immediate energy security trump long-term decarbonization schedules.

European regulators and energy ministers will monitor natural gas stocks and autumn weather forecasts closely. If elevated gas prices continue into the peak winter heating season, EU leaders will face renewed demands to accelerate renewable deployment and review power market balancing mechanisms.