Danish green energy company Orsted is building up its coal reserves with a view to burning more fuel next winter, just as the European Union approved a ban on imports of Russian coal as part of a fifth round of sanctions.

Chief executive Mads Nipper said a global shortage of wood pellets to fuel Orsted’s biomass power station meant the company could switch to coal later this year.

“No matter how much we hate it, we’re likely to see a temporary increase in coal use compared to the trajectory we’re on,” Nipper told the Financial Times.

“It was caused by the war situation,” he said, explaining that the Russian invasion of Ukraine, coupled with global supply chain challenges, Sourcing the specialized wood pellets that Orsted typically relies on has become extremely difficult.

“Biomass is hard to come by right now because everyone is looking for fuel,” Nipper said. “We have procured additional backup coal to ensure we are prepared.”

Shares in the $59 billion company have lost about a sixth of their value in the past 12 months, in part because of low wind speed This affects revenue.

While Orsted is known as the world’s largest developer of offshore wind farms, the company also owns natural gas trading sector, An American clean energy company that operates nine power plants in Denmark.

Of these, six mills use wood pellets or wood chips; two run on gasoline; and one runs on coal. Some plants burn more than one fuel.

Amid the European energy crisis triggered by the Ukraine war, Nipper said the increase in coal use was a “necessary short-term catastrophe” and that the company’s plans to close one of its remaining coal-fired power plants next year were unchanged.

Orsted also imports gas from Russia under a purchase contract with Gazprom, which runs until 2030.

Moscow asks foreign buyers pay their gas bills In rubles — a condition most EU countries refuse to meet — and threatened to cut off supplies if they didn’t.

Nipper said Orsted had “no intention” to pay for petrol in rubles.

“We stick to the existing contract terms,” ??he said, adding that the company was in dialogue with the European Commission on how to handle the situation.

“We really don’t want to deal with Gazprom, we obviously don’t want to. But we need to make sure that no matter what we do, we don’t send more money to Russia,” Nipper said.

Amid growing energy security concerns in Europe, the region is accelerating the development of renewable energy sources such as wind and solar.

Nipper called on governments to speed up the approval process so that clean energy projects can be built more quickly. But he admits that wind power won’t solve the problem in the short term due to the tight construction time.

“Transforming an energy system is not something that can happen in 12 or 24 months,” Nipper said. “But we’re in a hurry and we need to do everything we can to accelerate this transition.”

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