Europe's Key Rivers Fall to Critical Levels, Aggravating Energy Crunch

[Leroy N. Soetoro]

https://www.wsj.com/articles/europes-key-rivers-fall-to-critical-levels-
aggravating-energy-crunch-11660216554

Scorching temperatures have drained some of Europe’s main rivers,
threatening to disrupt vital economic thoroughfares and exacerbate the
continent’s energy shortage.

In Germany, the Rhine is at critically low levels, hampering deliveries of
coal and industrial goods, and is forecast to potentially become
impassable for most barges at a key stretch by the end of the week.

In France, the Rhône and Garonne have been too warm to cool nuclear
reactors, leading to lower output. In Eastern Europe, Danube levels are
dwindling, impeding a key Ukrainian grain route.

While Europe’s rivers have increasingly suffered dry spells in recent
years—which scientists say will become more common because of the warming
climate—this year’s crisis comes as the continent struggles with reduced
gas deliveries from Russia. The German government has decided to restart
coal plants to alleviate the crunch, a task now complicated by river
disruptions.

Shipping costs, meanwhile, have skyrocketed, fueling already high
inflation, since rivers are key arteries for transporting everything from
grains to chemicals to oil. And low water levels in reservoirs are
curtailing hydropower generation, adding to the strain on power supplies.

“This is clearly making Europe’s energy problems worse,” said Fabian
Skarboe Rønningen, senior analyst at consulting firm Rystad Energy. “Low
river levels and warm water temperatures affect both German coal and
French nuclear power, two of the largest sources of supply in Europe.”

In Eastern Europe, shipping via parts of the Danube, which drains into the
Black Sea, has become largely uneconomical since vessels can only operate
at around a third of their capacity, said Bulgarian captain Alexander
Kamenov, whose ship, the Adora, is currently stuck at port.

“I look at it from the port now,” Mr. Kamenov said. Some islands in the
middle of the river are now accessible by foot, he said.

Desiccated rivers are an example of what analysts and industry players say
is the growing role played by extreme weather in fueling commodity price
moves. Last year, a freeze in Texas caused chaos in U.S. energy markets,
while heat waves in India this year have scorched wheat crops.

In Europe, rivers link factories and cities, providing efficient shipping
routes. The volume of freight shipped via inland waterways in Germany
accounted for 7.1% of total freight transport in 2020, according to
consulting firm Capital Economics.

On Wednesday, the water levels of the Rhine, which runs 760 miles from the
Swiss Alps via Germany’s industrial heartland to the North Sea, fell to 45
centimeters in the key choke point of Kaub, near Frankfurt—roughly 50
centimeters lower than usual levels at this time of year. Levels are
expected to drop to 34 centimeters by the end of this week, making it
virtually impossible for most diesel barges to pass and hovering close to
the record low of 25 centimeters in 2018.

European companies in the energy, chemicals and other industries use it as
a shipping lane as well as a water source for production and cooling.

With Germany relying more on coal, much of the needed supplies are
transported from the Dutch ports of Amsterdam and Rotterdam, as well as
Belgium’s Antwerp, by barge. The coal reserves at most power plant sites
are currently only sufficient for about one week of full-load operation,
according to Marc Schattenberg, senior economist at Deutsche Bank
Research. Last year, the country imported nearly two thirds of its coal
via the river.

Shipper DTG Deutsche Transport Genossenschaft eG said its vessels were
currently operating at as low as 25% of capacity. “Customers now need to
charter up to four ships to transport the same amount of goods as before,”
said DTG manager Roberto Spranzi.

The disruption, however, comes at a time when fewer ships are available,
with demand rising both because of coal’s resurgence but also because many
European ships are currently in the Black Sea region to haul Ukrainian
grain, he said.

German energy firm Uniper SE last week warned of “irregular operation” at
one of its key coal-fired power plants because of a lack of deliveries
along the parched Rhine. Energy company EnBW Energie Baden-Württemberg AG
said that its coal loadings had been reduced because of low water levels.

Freight rates from the mouth of the Rhine in the Netherlands to Basel in
Switzerland reached 240.32 euros, equivalent to $248, a metric ton last
week, more than doubling from €111.92 a month ago, according to Lars van
Wageningen, manager of operations at commodity market-research firm
Insights Global. Quotes a year ago were just €11.28 a metric ton.

According to Capital Economics, the Rhine’s troubles add to pressures on
German industry and make a recession this year more likely.

Chemicals giant BASF SE, which supplies producers of everything from cars
to toothpaste, said that some types of ships can no longer be used and
will stop sailing given the predicted Rhine water levels. All other ships
will sail with reduced loads. BASF said that while production currently
isn’t affected by the low water levels, it might have to cut output at
some plants over the next few weeks.

The company said it had implemented an early warning system for low water
levels and is also chartering and developing ships suitable for lower
water levels.

In France, nuclear-power provider Électricité de France SA reduced
generation at a clutch of plants because warm water in the Rhône and
Garonne rivers made it challenging to cool them while meeting
environmental rules. Authorities in recent days have given the company a
waiver allowing it to run the plants at a faster pace. But the heat wave
is exacerbating pressure on the country’s nuclear industry, which is
grappling with corrosion problems at several reactors.

Swiss energy company Axpo Group has had to reduce output at Beznau
nuclear-power plant near the German border, which is river-water cooled,
due to high water temperatures on the Aare, a tributary of the Rhine. Low
water levels, meanwhile, have affected the company’s hydropower
production, with electricity production from its power plants that harvest
river water around 25% below the long-term average last month.

Shallow Danube waters have disrupted Ukrainian grain transport. After the
start of the war, state-owned Ukrainian Danube Shipping Co. used most of
its fleet to transport grains from the Ukrainian city of Izmail on the
border with Romania via the Danube to the Romanian port of Constanta, a
conduit for Ukrainian grain amid Russia’s blockades.

Dmytro Moskalenko, the company’s general director, said that dwindling
water levels have complicated the task and the barges have to operate at
lower capacity.

“The situation is unprecedented, it’s the hardest year on the river,” he
said.

In the U.K., the source of the Thames has dried up due to a lack of
rainfall, according to the Rivers Trust, an organization of river
conservation experts. Thames Water Utilities Ltd., which serves 15 million
people, is preparing to add water usage restrictions in London and
surrounding areas.



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