Gas prices keep rising in Europe as Russia undergoes routine maintenance that leaves the Nord Stream gas pipeline operating at dramatically reduced rates to Europe, Bloomberg reported.

The pipeline is expected to operate at just 20% capacity from Wednesday as Gazprom PJSC takes another turbine out of service for maintenance, adding to Europe’s natural gas supply problems. The European Union is battling record heat in many countries while scrambling to build up reserves for winter, the peak gas demand season.

The recent reduction is due to the fact that turbines sent abroad for repairs have been caught in sanctions delays, according to Russian newspapers. Deutsche Bank AG wrote in a research note that the turbine should not be needed until September and warned of “gas politics” as a risk.

“There is still great uncertainty about whether Russian leaders will completely turn off the gas tap,” Claus Niegsch, an industry analyst at DZ Bank, told Bloomberg. “This is particularly worrying for manufacturers as planning for the coming months is becoming increasingly difficult.”

The ongoing energy crisis in the EU has meant that the bloc has recognized the need to turn to coal in the short term to meet energy demands during the historic heat felt now as well as energy needs this coming winter, l Germany already sanctioning several of the restarting of its coal-fired power plants.

“It is likely that there will be increasing upward pressure on emissions from burning coal due to increased energy demand driven by record heat waves across Europe and the natural gas rationing,” Eron Bloomgarden, a partner at Climate Finance Partners, wrote on Climate Market Now. Blog.

Image source: Ember

“While there may be some short-term easing of regulatory policy to provide immediate relief, in the long term there is likely to be significant upward pressure on EUA prices (l European Union) due to growing emissions as well as the geopolitical urgency to decarbonize Europe’s economy as quickly as possible,” Bloomgarden explained.

The energy crisis has created a long-term bullish outlook for the carbon trading market in the EU. The third quarter will bring with it a reduction in auction volumes from the EU Emissions Trading System (EU ETS) as it seeks to reach its annual total number of allowances in circulation. This year, there was a surplus that led to carbon allowances exceeding 833 million on the market. 24% will now be withheld from the auction to tighten supply, creating pressure on EUA prices and adding to the reserve of market stability.

“Beyond 2022, the long-term bullish outlook will likely be driven by rising power sector emissions as well as further tightening ETS reforms taking hold,” Bloomgarden wrote.

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