Europe eyes coal as Iran war strains energy security
German Chancellor Friedrich Merz shocked Berlin’s energy establishment this week by casting doubt on Germany’s legally-binding timetable to phase out coal by 2038, saying the plan may no longer make sense in a world where the war on Iran has driven gas prices higher and tangled global energy markets.
“We may have to keep existing coal-fired power stations connected to the grid for longer,” Merz told the FAZ Congress 2026 in Frankfurt, adding that he was unwilling “to jeopardise the core of our energy supply simply because we decided on phase out dates years ago.”
Merz underscored that renewable expansion should continue, but insisted new base load capable gas plants are needed now — “built at existing power station sites” — and that they should not automatically be made hydrogen ready from day one.
His remarks came as the 1.05 GW Datteln 4 plant in North Rhine Westphalia — widely regarded as one of the world’s most efficient and flexible coal units — was being brought back online after planned maintenance.
Behind the scenes, industry voices such as the German Coal Importers Association (VDKi) have been pushing for greater use of the reserve fleet, not just to protect gas stocks but to temper price volatility.
“We have heard nothing yet,” a German source told McCloskey, suggesting that any move to bring reserve plants back to market may be facing resistance from the Social Democratic Party (SPD).
“I think it’s very difficult while it’s still unclear how long the Iran war will last. (Donald) Trump changes everything from one day to the next. Restarting power plants is a huge cost, both economically and politically,” said a European source.
Reserve plants ready to be reactivated
However, another German source added that bringing the reserve plants back online would not carry a high economic cost: “All of Germany’s reserve plants are ready to be reactivated, all have coal in stock, and the employees are ready to start working.”
Still, others cautioned that the main hurdle may be regulatory rather than economic. “They would have to change the law, which is complicated in Germany. The nuclear plants are a good example, even though it was an open secret that the government had taken a rushed and wrong decision, the law was never changed and the nuclear plants still shut down. They may have learned their lesson and things could be different for coal plants,” another market source told McCloskey.
This week, German power markets reflected the urgency of the moment. Power prices jumped to EUR123.62/MWh from EUR86.57/MWh last week, peaking at EUR150.00/MWh, even as renewables supplied 62% of the grid, down slightly from 66%. The surge pushed clean-dark spreads back into the black at EUR14.53/MWh, reversing last week’s EUR22.12/MWh loss.
European thermal coal prices have been volatile, averaging around $116.00-117.00/t DES Amsterdam-Rotterdam so far this week, up from $110.60/t the week prior and $107.49/t before the attacks on Iran began.
Gas-fired plants lagged behind, with margins narrowing to –EUR8.82/MWh from –EUR51.94/MWh, as German gas averaged just under EUR52.00/MWh, down from EUR55.15/MWh.
VDKi itself has urged authorities to let more than 6 GW of hard coal reserve plants participate in the market during price spikes. The association argues that relatively young hard coal units, deployed as backup, should be reconsidered rather than replaced with costly new gas plants. It contends that the “climate case against coal is weak,” highlights coal’s flexibility, and warns that removing hard coal backup could undermine energy security, especially as global coal supplies are widely available and less exposed to geopolitical disruptions.
This recalibration in Berlin comes as the Iran conflict — marked by strikes on energy infrastructure and disruptions to shipping through the Strait of Hormuz — has rattled global fuel markets. The International Energy Agency warns that oil supply interruptions tied to the war will begin hitting Europe’s economy in April, elevating inflation and stressing supplies of refined products like diesel and jet fuel.
Italy delays phase-out
Elsewhere in Europe, Italy is writing a similar revision of its own energy transition playbook. The country’s previously hard 2025 deadline to phase out thermal coal has been pushed out to 2038 amid the same global market strains triggered by the Middle East conflict. Gas already accounts for nearly 40 % of the country’s energy supply, and four new gas fired plants have been commissioned since 2022. But with energy prices shaken by the war and supplies under pressure — including disruptions to LNG flows from Qatar — the government has opted to keep key coal units in a standby role rather than shut them down outright.
Italy’s two largest coal generators — the 1.9 GW Torrevaldaliga Nord and 2.6 GW Brindisi Sud — stopped regular coal generation by the end of 2025 but have remained in emergency or reserve status in 2026. On Sardinia, the 590 MW Sulcis and 640 MW Fiume Santo plants are also being kept intermittently online as grid interconnections and renewables come online, with closure now expected later this decade.
Energy minister Gilberto Pichetto Fratin argued that this pragmatic delay is necessary to avoid blackouts and allow time for new gas capacity and storage projects to fill the gap. But environmental campaigners say keeping coal plants on standby until 2038 undermines Italy’s emissions commitments and locks the country into fossil fuels far longer than promised.
There are growing signs that Poland could also ease the pace of its transition away from coal, which still provides around half of the country’s electricity generation. However, Poland’s finance minister, Andrzej Domański, told local media sources last week he did not foresee a return to coal-centric power generation, dismissing talk of a “coal renaissance” in the country.
The conflict in and around Iran has triggered a significant rethink across European capitals. With the closure of the Strait of Hormuz and attacks on Middle Eastern energy infrastructure, global oil and gas prices have surged and exposed Europe’s heavy reliance on imported fuels. European gas prices have jumped more than 70% since the US–Israel war with Iran began in late February, prompting calls among EU energy ministers to prepare for potentially prolonged disruption.
Brussels has urged member states to brace for continued volatility and called for conservation and coordinated action to stabilize supplies.
For policymakers in Berlin and Rome, these shocks have underscored a simple reality: Europe still needs reliable backup capacity while it expands renewables and explores nuclear fusion and small modular reactors. Keeping strategic, efficient coal units on standby is emerging not as a step backwards, but as a hedging strategy in an uncertain world.
Dutch coal delay?
Higher gas prices due to the war in the Middle East are also prompting calls from politicians in the Netherlands to postpone the closure of all three Dutch coal-fired power stations, scheduled for 2030, according to local media. Leader of coalition partner CDA Henri Bontenbal proposed keeping the three power plants open during a debate on the crisis earlier this week.
“Given the choice, people would prefer polluting electricity on a temporary basis to no electricity at all,” broadcaster NOS cited Bontenbal as saying.
Dyonne Rietveld, director of the Uniper-owned coal-fired power station on the Maasvlakte in Rotterdam, said that the closure of the station must be decided soon. “It is irreversible, so the cabinet can’t put in a last-minute call to keep it open. That capacity will be gone,” she told NOS.
Coal-fired generation in the Netherlands increased 25% last year, supporting record electricity exports, particularly to Germany to make up for periods of lower wind power production and reduced hydropower production in Switzerland and Austria due to lower water levels.
The question now is whether policymakers will forget the turmoil that this most-recent energy shock is causing – as seems to be the case after the worst effects of the invasion of Ukraine by Russia, faded, and likewise spells of low renewable generation.
On Wednesday, US President Donald Trump, speaking from the Oval Office on the war with Iran, reiterated his claim that the conflict could end within “two or three weeks,” arguing that US military objectives have largely been achieved and that the Strait of Hormuz would reopen “naturally” once hostilities cease. He added that ensuring safe passage would ultimately fall to other countries.
“We are on track to complete all of the United States’ military objectives soon—very soon,” Trump said.
He maintained that continued pressure would decisively weaken Tehran. “These actions will cripple Iran’s army, crush its ability to support its terrorist proxies, and deny it the capacity to build a nuclear bomb,” he said, again promising to strike the country “very hard” in the coming weeks.
The remarks followed comments a day earlier in which Trump suggested the offensive could conclude within the same “two or three weeks,” regardless of whether a deal is reached with Iran’s leadership. On Wednesday, ahead of his speech, he went further, claiming Tehran had sought a ceasefire—an assertion Iranian authorities swiftly dismissed as “false and unfounded.”
In a social media post, Trump wrote that “the president of the new regime” in Iran, “far less radicalized and much smarter than his predecessors (…) has just asked the United States for a ceasefire.”
However, in a further shift in tone, he indicated Washington would only consider such a step “when the Strait of Hormuz is open, free, and clear.” “Until then, we will bomb Iran until it disappears or, as they say, send it back to the Stone Age!” he warned.
Throughout a speech lasting less than twenty minutes, Trump repeatedly insisted the conflict was already effectively won. He attributed rising oil prices entirely to Iran, accusing it of carrying out “crazy attacks on tankers from neighboring countries that have nothing to do with this conflict.” He predicted prices would fall sharply once the war ends and stressed that the United States, as the world’s largest producer, does not depend on Persian Gulf oil. “Buy from us,” he urged countries affected by disruptions to the strait.
Trump also pointed to closer energy ties with Venezuela. “We are now working hand in hand with Venezuela; we are—strictly speaking—partners in a joint venture,” he said. “We are getting along wonderfully when it comes to the production and sale of massive quantities of oil and gas, the second-largest reserves on Earth, behind only those of the United States.”
The market did not react well to the address, with crude oil prices climbing to above $109.06/bbl, up around 8%.
Ahead of Trump’s speech, McCloskey analysts had sketched out two scenarios. The first, based on a rapid end to the war, and the resumption of operations through the Strait of Hormuz by mid-May, could add an addition 0.5 mt to Europe’s thermal coal imports.
Their second, and now, more likely scenario, is based on a slower peace between Iran and the US and Israel, with the war concluding later in Q2 and Strait of Hormuz transits returning to normal by end-Q2. Under that, Europe could snap up an additional 2.3 mt of thermal coal.
As Europe grapples with the combined shock of the Iran conflict and surging energy prices, the continent’s energy landscape faces a stark choice: accelerate the green transition at the risk of short-term shortages, or rely on flexible coal and gas capacity as a hedge against geopolitical disruption. For now, policymakers appear to be buying time, while markets brace for continued volatility and import adjustments. How long this balance can hold—and whether it will shape long-term policy—remains an open question.