The "gas contingency plan" spells out the steps in which customers are disconnected if there is too little gas in Germany. First, an attempt is made to remedy a regional shortage by redistribution. Then internal orders can be cut off and supplies to gas-fired power plants interrupted. Finally, industrial customers can be disconnected following a predetermined order. In this way, the "protected customers," i.e., private households and hospitals, are to be supplied as far as possible even during the crisis.

According to the emergency plan, there are three levels: the early warning level, the alert level and the emergency level. The early warning stage must be declared if there are concrete and serious indications that a significant deterioration in gas supply could occur. Habeck is now convening a crisis team with the Federal Network Agency and energy suppliers to regularly assess the situation and keep an eye on gas storage facilities, which are currently 25 percent full. The alert level comes into effect if there is a disruption in gas supply that the market can still cope with. The last level is the emergency level: then the state steps in and imposes "non-market-based measures" to ensure supply to "protected customers."

The background is Russian President Vladimir Putin's threat to accept payments for gas deliveries only in rubles in the future in order to stabilize the Russian currency. The G7 countries and the European Union see Putin's threat as a clear breach of contract, but the Kremlin continues to insist. In response, Russia could turn off the gas tap on the important Nord Stream 1 pipeline, for example. However, the Kremlin said on Wednesday that the switch in payments for Russian gas supplies to Europe from euros and dollars to rubles would not yet take effect on Thursday. Germany last bought 55 percent of its gas from Russia, but the share has fallen to 40 percent as a result of contract adjustments.

None at present. Habeck stressed that the overall supply to all German gas consumers is currently still guaranteed - this applies to private consumers and social welfare institutions such as hospitals, but also companies, district heating and the electricity sector. However, Habeck appealed to companies and private consumers "that they help us, that they help Germany, that they help Ukraine when they save gas and energy overall." The German Association of Energy and Water Industries (BDEW) says: "But also this winter no one has to freeze."

Talks have been going on for weeks between the state and industrial customers about which companies would be the first to go off the gas grid, just in case. Some companies have supply contracts that give them favorable conditions in exchange for a willingness to be disconnected. Other companies, such as those in the glass industry, may not be cut off because vials for the Covid vaccine are needed, for example.

Uniper (an energy company based in Duesseldorf) welcomes Habeck's announcement. "It makes sense to declare the early warning stage in the current situation in order to be prepared for an escalation that no one can currently rule out," the spokesman said. The industry association BDEW has been calling for this step for weeks. If worse came to worse, he said, things would have to move quickly, and then all stakeholders would have to know their rights and obligations. Eon, the largest network operator, said, "We support the German government's decision to declare the early warning stage of the emergency gas plan, because in the current situation we have to prepare for many conceivable scenarios in advance and as a precaution. The early warning stage facilitates the coordination of all relevant market players with the responsible bodies in politics and administration."

The co-chairman of the Left Party parliamentary group in the Bundestag, Dietmar Bartsch, called on the German government to use a televised address to educate people about the emergency gas plan and the possible consequences of a supply freeze. "It is right, the federal government must not allow itself to be blackmailed. But it is unclear what this emergency plan means, which stages come when and what the consequences of a supply stop would be." The CDU/CSU faction in the Bundestag is insisting on an extension of the operating times for nuclear power plants. "I still do not understand why the German government refuses to allow the existing nuclear power plants to be used for longer for ideological reasons. 13 percent of Russian gas is currently used to generate electricity in Germany. If we were to start reducing there, we would already make ourselves a bit more independent," said CSU state group leader Alexander Dobrindt.

The German Council of Economic Experts drastically scales back its forecast for the German economy. Because of the war in Ukraine, it expects gross domestic product to grow by only 1.8 percent this year instead of the 4.6 percent initially predicted. If there is a halt to Russian energy imports, a recession is also possible. Economists speak of recession when the economy shrinks for two quarters in a row. "The risk of a recession is substantial," said economist Volker Wieland. Added to that are rising prices: The experts expect an inflation rate of 6.1 percent this year. If oil and gas prices continue to rise, the inflation rate could even climb to 7.5 to almost nine percent. This is fueling concerns about stagflation (i.e. stagnation and inflation). In 2023, the German economy could grow again, and the inflation rate could fall to 3.4 percent, according to the experts. Ultimately, it all depends on how the war develops.

Orig. text: Antje Höning, Kerstin Münstermann, Jana Wolf, Holger Möhle

Translation: ck