To be able to honour its gas export contracts, Russia has to turn to coal, said Kevin Rosner, senior fellow at the US Institute for the Analysis of Global Security.
Rosner presented his research, entitled 'Russian coal: Europe's new energy challenge' and sponsored by the German Marshall Fund of the United States, at a public event hosted by the Friedrich Ebert Foundation. Several experts and officials took part in the debate, held under Chatham House rules.
Russia has established an image for itself as an oil and gas giant, yet the country has gigantic coal reserves, second only to the USA, the research paper says. Rosner argues that the overarching aim of the analysis is to ensure that when those coal reserves are used, they have the smallest possible impact on the world's climate.
Other speakers pointed out that coal is produced in 26 Russia regions and its development is seen as a "factor of stability".
"Nobody dares to shut down a coal mine," as one speaker put it.
The Russian coal industry is also less centralised than the oil and gas sector and has to a large extent been privatised.
But Russian coal is of poor quality and its burning into the atmosphere is not a good option, speakers said.
"Russia coal is not competitive for example and has been displaced by Australian and South African coal in the UK, because its sulphur content is too high, and also its moisture content. That's why the shale gas people say, 'the coal is there, the gas is there, the coal is not good for export, then take the gas from it, and leave the coal underground,'" Rosner said during the debate.
Shale gas, the miracle solution?
Shale gas, produced from layers of sedimentary rock that are difficult to tap with conventional technology, was recently developed in the USA and made the country self-sufficient in gas, even bringing down world prices. Experts note that shale gas can be produced at coal basins and could be the miracle solution for Russia as well. However, speakers lamented that Russia had not formulated clear ideas about extracting shale gas.
Development of shale gas is set to rise by 71% between 2007 and 2030, the International Energy Agency said. In recent statements, Gazprom officials have shown disdain for shale gas and cited the possible negative environmental impact of developing such technologies.
Speakers said that developing shale gas was even more important for Ukraine, a country which has no gas resources but is rich in coal. Ukraine, like some EU countries such as Poland, could become less dependent on Russian gas by developing its own production, they said.
However, technological problems linked to shale gas extraction would represent an obstacle, it emerged during the discussion. Also, as Rosner's paper indicates, Western strategies for sharing technology with Russia are conditional on the country liberalising its domestic energy market and its commitment to cutting greenhouse emissions.