Coal: EU total ban on Russian product to take effect mid-August

The European Union on Thursday approved a ban on Russian coal that will take full effect from mid-August, a month later than initially proposed, following pressure from Germany to delay the measure.

The phasing out of EU imports of Russian coal is the key measure in a fifth package of sanctions against Russia that the EU Commission proposed this week in reaction to atrocities in the Ukrainian town of Bucha.

Once approved, it will be the EU’s first ban on any energy imports from Russia since the start of what the Kremlin calls a “special operation” in Ukraine on 24 February.

Oil and gas, by far the largest imports from Moscow, have not yet been affected. Much of Europe’s purchase of Russian coal is on the spot market, rather than through long-term contracts. These spot purchases would stop immediately after the imposition of sanctions.

The EU Commission had initially proposed a three-month liquidation period for existing contracts, meaning that Russia could effectively still export coal to the EU for 90 days after the imposition of sanctions. But that period was extended to four months.

This followed pressure mainly from Germany, the EU’s main importer of Russian coal.

With sanctions expected to take effect at the end of this week, or early next week, after publication in the EU’s official gazette, Russian companies will actually be able to export coal to the EU until mid-August under existing contracts.

Most coal contracts are short-term, and a 90-day settlement period would have allowed most of them to be concluded without the need for cancellation, avoiding legal risks.

Although toned down slightly from the original proposal, the EU’s planned ban on Russian coal is more ambitious than that of Britain, which reportedly planned to ban coal imports from Russia by the end of the year.

The EU Commission has estimated that the coal ban could cost Russia €4 billion ($4.36 billion) a year in lost revenue.