BRUSSELS, April 5 2022: The European Union is proposing to ban coal imports from Russia in a direct response to reports that Russian forces committed apparent war crimes in Ukraine, European Commission President Ursula von der Leyen said Tuesday.
The action on coal — which von der Leyen said would amount to 4 billion euros ($4.4 billion) a year — would allow for a three-month wind-down before a ban on new contracts, according to two people familiar with the matter.
The coal provision was added to a package of steps aimed at strengthening existing measures and correcting loopholes that was already set to be debated this week by EU ambassadors. The European Commission is also proposing to ban most Russian trucks and ships from entering the bloc, von der Leyen said, with exceptions allowed for agricultural products, humanitarian aid and energy.
“These atrocities cannot and will not be left unanswered,” von der Leyen said. Germany, which had previously blocked efforts to embargo Russian energy, is ready to consider a Russian coal ban and is in discussion with the EU about the timing of such a move, according to a German official with knowledge of the discussions.
Year-ahead futures for coal delivered to northwest Europe jumped as much as 7.9% to $205 a ton. Russia supplies about half of the continent’s thermal coal, used to fuel its power stations and generate electricity.
The EU isn’t planning to sanction oil or gas for now, despite intense pressure to inflict more economic pain on Moscow, the people said. But EU nations are deeply split over the next steps and some governments are continuing to push for at least a signal this week that the bloc is looking to reduce Russian oil imports, one of the people said.
One option short of an outright oil ban would be to phase out Russian oil and use Europe’s strategic oil reserves to cushion the impact, says a senior EU official. Another option would be to put tariffs on the sector, while a third option would be to create en escrow account to freeze the extra profit Russia is making off oil prices rises since the war started, the official said.
Several governments, including Germany and Hungary, have resisted expanding the scope of sanctions to Russia’s energy sector, but the allegations that retreating Russian troops had executed scores of unarmed civilians led to a renewed push by some of the bloc’s eastern members to strengthen those measures. EU leaders have already endorsed the goal of phasing out its reliance on all Russian fossil fuels by 2027.
Even before sanctions, European energy companies were already struggling to get their hands on Russian coal. Many banks were refusing to finance commodities trading, forcing some of the continent’s biggest utilities to buy coal in South Africa and Australia.
The European Commission proposed on Tuesday new sanctions against Russia over its invasion of Ukraine, including a ban on buying Russian coal and on Russian ships entering EU ports, and said it was working on banning oil imports too.
“We all saw the gruesome pictures from Bucha and other areas from which Russian troops have recently left. These atrocities cannot and will not be left unanswered,” the head of the European Union’s executive, Ursula von der Leyen, said.
“The four packages of sanctions have hit hard and limited the Kremlin’s political and economic options. In view of events we need to increase our pressure further,” she said in a speech posted on Twitter.
She said the proposal entailed an EU ban on imports of coal from Russia worth 4 billion euros per year, and a full transaction ban on four key Russian banks, including the country’s second-largest, VTB.
“We are working on additional sanctions, including on oil imports, and we are reflecting on some of the ideas presented by the member states, such as taxes or specific payment channels such as an escrow account,” von der Leyen said.
The EU will also ban Russian vessels and Russian-operated vessels from accessing EU ports, though there would be exemptions for agricultural and food products, humanitarian aid and energy.
The EU will also ban Russian and Belarusian road transport operators and prohibit the sale to Russia of quantum computers, advanced semiconductors, sensitive machinery and transportation equipment worth 10 billion euros annually.
Von der Leyen said the 27-nation bloc will also stop imports of Russian wood and cement as well as seafood and liquor worth in total some 5.5 billion euros annually.
It will exclude Russian companies from public procurement tenders in EU countries and add further individuals to a list of people whose assets in the EU will be frozen and who will not be allowed to enter the EU.