The most pessimistic predictions of German Economy Minister Robert Habek did not come true. From Thursday, July 21 via the gas pipeline “Nord Stream – 1“Russia supplies gas to Germany again. However, already in June, Gazprom reduced supplies to 40%. Habek called it blackmail and stated that “Putin is going to use energy as a weapon“. How does Germany intend to deal with this problem further?
Energy policy expert of the Free Democratic Party of GermanyMichael Kruse Radio Liberty explained: “Germany and the European Union are in a state of economic war, which Russia started even before the attack on Ukraine.” According to the expert, “Vladimir Putin violates gas supply agreements and uses leverage to infringe on the economic interests of Europeans.” The only remedy against this blackmail is to end Europe’s dependence on Russian energy.
As early as last winter, before the start of the Russian invasion of Ukraine, Germany launched extensive programs to find alternatives to Russian gas. By the end of June, dependence on it was reduced from 55% to 26% of total gas imports – again thanks to Gazprom, which, under the pretext of technical work, reduced supplies via Nord Stream 1 in June.
Collapse is not expected…
Head of the Federal Network Agency Claus Müller told the portal daily News24that Germany now lacks 60 percent of the gas that was included in the calculations of utilities supplying energy to households. The reduction in gas supplies will have a heavy impact on industry as well. Energy Expert of the Union of the Chemical Industry Jörg Rothermel Radio Liberty explained: “For our industry, gas is a fundamental source of energy. The German chemical and pharmaceutical industry consumes 15% of the total supply.” According to him, gas supply is guaranteed at present. However, during the heating period, starting in autumn, interruptions are quite possible that will greatly affect these industries. If there is a sharp reduction in production, it will affect the entire German industry.
In fact, two-thirds of all gas is used to heat homes and small businesses in the home, such as hairdressers, dentists, bank branches and shops. Energy Economics Expert of the German Institute for Economic Research Professor Franziska Holtz told Radio Liberty that only about a quarter of the gas is used for the needs of the industry, a small part goes to the production of electricity.
The expert does not believe that Germany is in danger of catastrophe or industrial collapse. In her opinion, Robert Habek dramatizes rhetoric so that society better understands the seriousness of the situation and is ready to cooperate. After all, saving energy in private households is one of the main factors in reducing tension in the gas sector. However, Holz emphasizes: in any case, it is better for Germany for the time being to have Russian gas supplied, albeit in a reduced volume. Only in this way the country will survive the winter without any problems.
Germany must receive gas, diversify energy sources and at the same time save
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Now the main point of the German government’s plans, as the Minister of Economics stated, is filling gas storage facilities up to 90% by November. Only this, with the strictest economy and optimization of the transport and network infrastructure, will reduce the problems associated with a decrease in gas supplies from Russia, a complete rejection of Russian coal by autumn and Russian oil by the end of the year.
Until January, the volume of gas in storage under an optimistic scenario will be reduced to 65%. But this is not a critical level, emphasizes Professor Holz. Further, everything depends on the implementation of the programs outlined by the government. If we manage to keep energy savings at the level of 15%, which has already been achieved, we will be able to survive the winter without much hardship and excessive stress.
In the event of a complete cessation of supplies via Nord Stream 1, the last stage of the emergency plan will have to be put into effect as early as January: many industries will be cut off from supplies and switched to priority provision of residential premises, hospitals and critical infrastructure enterprises.
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–German Economy Minister Robert Habeck: winter will be difficult
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In any case, the head of the network agency emphasizes, “Germany must receive gas, diversify energy sources and save at the same time.” On the eve of Robert Habek announced a new package of measures for energy security. In addition to tight deadlines for filling gas storage facilities, it contains plans to release brown coal reserves for thermal power plants, priority transportation of coal and oil by rail, measures to save heating energy in public buildings, as well as a mandatory check of all technical devices. In addition, a decision has been made to ban the heating of private pools in winter, and public energy providers should no longer force consumers to maintain the temperature of residential premises at the minimum acceptable level during their absence. Previously, this was mandatory for technical purposes.
…but there will be a doubling of prices
Official representative of the German Ministry of Economics Suzanne Ungrad also confirmed to Radio Liberty that “energy supply in Germany is currently guaranteed, and everything is being done to ensure that this situation continues in the future.” In Germany, most apartments and houses are heated locally. Central heating has been preserved in the territory of the former GDR and in some apartment buildings in West Germany. The supply of utility energy companies is carried out by large concerns. They are in a critical situation. The government is between two fires: on the one hand, it is necessary to provide large enterprises with liquidity, compensating for losses from the lack of Russian gas. Its shortage, according to Franziska Holz, leads to a catastrophic increase in market prices for energy purchases. Already now they have increased tenfold. Therefore, the government will not be able to do without injecting state aid into concerns such as Uniper, which provide utility companies with 70% of energy. Chancellor Olaf Scholz The day before, he confirmed that 30% of the concern’s assets would be transferred to the government.
On the other hand, it is necessary to avoid negative consequences for the population. The government allowed enterprises to raise prices for end consumers, violating contractual deadlines. However, poor citizens will not be able to cope with the doubling of prices. Namely, such an increase awaits everyone in Germany during the heating season. According to Franziska Holz, the government will not be able to do without compensation for gas prices for the population.
A government spokeswoman told Radio Liberty that two such packages have already been approved. They include an increase in social benefits for the poor, an energy supplement, as well as a one-time payment of 100 euros for each child and 300 euros for each household. In the future, it is planned to lower taxes on gasoline and introduce the already tested cheap monthly subscription to public transport.
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–One of the operators of the Nord Stream 1 gas pipeline at work. It seems that in the coming months and years this work will be less
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However, this may not be enough. While the Cabinet of Ministers is discussing new measures with representatives of social unions. Minister for Consumer Protection Steffi Lemke called for a moratorium on disconnecting debtors from energy supplies, but these amounts should also be compensated to suppliers – and, as a result, also allocated from the budget. Either way, bailing out corporations and supporting households will require the release of large financial reserves in the short term.
Suzanne Ungrad explained to Radio Liberty that Germany would receive gas from other sources. Currently, according to her, the main alternative suppliers are Norway and the Netherlands. Germany compensates half of the loss of Russian gas thanks to these countries. The second half can be offset by energy savings.
Franziska Holz also notes the importance of efficient use of energy, such as thermally sealing buildings with modern building materials. This leads to a saving of 15% of heating energy. Thanks to the correct adjustment of switchgears, it is possible to reduce gas consumption by 10%. Since more than two-thirds of the buildings are heated by gas, this is already a significant savings.
Alternative energy sources, the construction of terminals for the production of liquefied gas – this is the music of the future. For this, experts believe, it is also necessary to optimize the infrastructure and build distribution networks, which will take months, if not years. At the level of the European Union, a search for pan-European solutions is underway.
Are Russians laughing at the fact that Germans will use public transport more often, shower less and reduce meat consumption? “How to look,” says Holz. “For us, this is a contribution to the fight against climate change. It’s not funny at all.”
We need iron endurance for the long distance
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Susanne Ungrad emphasizes that Germany is re-commissioning coal-fired power plants, but does not abandon its climate goals. On the contrary, it is planned to increase the use of renewable energy sources to 60% as soon as possible. New gas stations will be built taking into account the transition to hydrogen in the future.
If the worst-case scenario occurs, Franziska Holz believes, Germany will survive it, as it survived the pandemic. A 4% reduction in industrial growth, which would be one of the consequences of completely cutting off gas supplies from Russia, will not lead to the collapse of the economy. In the new law on energy security, the German government provided for measures to stabilize critical infrastructure enterprises in the energy sector in order to preserve market chains and avoid “cascading effects” in the economy.
“We need an iron grip for the long haul,” Robert Habeck said after the presentation of the new energy package. So far, one thing is absolutely clear: the European Union will not retreat from the adopted sanctions. According to the latest survey commissioned by the ZDF television channel, more than two-thirds of German citizens are willing to go to great lengths to end the war.
