Energy supply Gas crisis in Germany: Economics minister sounds the alarm
Berlin · Natural gas is still available everywhere, albeit at sharply higher prices. But looking ahead to winter, the German government is extremely concerned.
Following the drastic reduction in gas supplies by Russia, the German government has triggered the ‘alert level’ of its emergency gas plan. “Natural gas is a scarce commodity in Germany from now on," said Economics Minister Robert Habeck.
At the moment, however, supply security is guaranteed, he added. Natural gas customers don’t have to worry, at least for now, that their suppliers will cancel supply contracts and demand higher prices. This would require a further step by the Bundesnetzagentur (Federal Network Agency for electricity, gas, telecommunications, post and railway markets).
Habeck called for conserving gas. "It will be a national effort. But we can manage it in solidarity with each other - federal, state and local governments, citizens, companies, civil society." Industry, government and private households should continue to reduce consumption. Among other things, Habeck called for heating systems to be serviced. He said this could result in savings of 15 percent.
"Winter will come"
Even if gas is still being procured and being stored on the market at the moment, "The situation is serious, and winter will come," said the Green politician. He added that it was the failures of the past decade "that have now led us into this difficult situation.”
In his own words, Habeck expects prices to continue to rise. That will affect industrial production and become a major burden for many consumers, he said. The government will provide relief for people with low incomes, he said. "We won't be able to absorb everything, but where people have already tightened their belts and fear the next heating bill, we have to help.”
Second stage of the German gas emergency plan
The emergency plan has three stages: The second stage is the ‘alert level’ which has now been triggered following the early warning level. The third stage would be the ‘emergency level’. According to the plan, at the ‘alert level’, there is a disruption in natural gas supply or exceptionally high demand that leads to a significant deterioration in the supply situation. However, the market is still capable of handling this disruption or demand.
The reason for declaring the ‘alert level’ is the cut in natural gas supplies from Russia as well as prices on the market. German storage facilities are 58 percent full, he said. "But if Russian gas supplies via the Nord Stream 1 pipeline continue to remain at the low level of 40 percent, a storage level of 90 percent by December is hardly achievable without additional measures," the ministry said.
Despite the ‘alert level’ going into effect, utilities are not yet being given the opportunity to raise their gas prices under the Energy Security Act. The mechanism also has downsides, Habeck said. Therefore, alternatives are being worked on. If the regulation were activated, utilities would be able to pass on their additional costs to their customers within a week. Old contracts would then become invalid, even if there was a price guarantee.
Reserve coal-fired power plants for electricity generation
The government intends to take several measures to combat the worsening gas crisis. Among other things, reserve coal-fired power plants are to replace electricity generation from gas-fired power plants. The law which spells this out is to be passed by the Bundesrat on July 8. "This is painful. Coal-fired power plants are simply poison for the climate. But for a transitional period we have to do it to save gas and get through the winter," Habeck said.
A credit line of initially 15 billion euros will be made available for further filling of the storage facilities. An auction model is to make it more attractive for industrial consumers to save gas from the summer onwards.
Habeck: Hopefully there will never be gas rationing for industries
Industrial rationing is to be avoided if possible. "It should not happen in any month at all, in the best case scenario," Habeck said, but added, "I can't rule it out, of course, because it's preconditional, based on what we're doing. But it's not a scenario we're working toward - quite the opposite."
Business associations expressed concern. The president of the Association of German Chambers of Industry and Commerce, Peter Adrian, said it was good that the German government was not allowing higher gas prices to be passed on to customers at the moment, despite existing contracts. A fair balance between suppliers and customers must be achieved, he said. The plans to reward gas savings in the industry are right, he said.
The chemical industry, which consumes 15 percent of the gas in Germany according to its industry association VCI, also called for a fair burden sharing. Reducing gas supplies poses huge challenges for society and industry, a VCI statement said. "A transparent process must be developed that distributes the unavoidable burdens as fairly and tolerably as possible among all gas consumers.”
(Orig. text: dpa; Translation: ck)