Gas crisis in Germany: Habeck sounds the alarm
“This is an external shock”: Federal Minister of Economics Robert Hebeck.
Natural gas is still available everywhere, albeit at very high prices. But in view of the winter, the central government is very concerned.
Updated: 06/23/2022, 15:20
Berlin. After a massive reduction in gas supplies by Russia, the federal government announced an alarm level in the gas emergency plan. “Gas is now a rarity in Germany,” said Economics Minister Robert Habeck.
However, security of supply is currently guaranteed. At least for the time being, gas consumers do not have to fear that their suppliers will terminate their supply contracts and demand higher prices. This would require a further step by the Federal Network Agency.
Hebek called for gas savings. “It will be a national effort. But we can tackle it in solidarity – federal, state and local governments, citizens, companies, civil society.” Industry, the state and private households should continue to curb consumption. Among other things, Hebek called for the heating system to be serviced. This results in a saving of 15 percent.
“Winter will come”
Even if gas is currently being procured and stored on the market: “The situation is bad and winter will come,” said the Green politician. It was the course of the last decade “that got us into these difficulties”.
In his own words, Hebek assumes that prices will continue to rise. This will affect industrial production and become a huge burden for many consumers. The government will ease the burden on low-income people. “We won’t be able to absorb everything, but where every cent has to be doubled and the fear of the next heating bill should be avoided, we have to help.”
The second phase of the gas emergency plan
There are three levels of emergency planning: The alert level that has now been declared is only surpassed by the early warning level. The third will be the emergency level. The alert level, as planned, indicates an interruption in gas supply or exceptionally high demand, leading to a significant deterioration in supply conditions. However, the market is still able to handle this disruption or demand.
The reason for the announcement of the alert level is the reduction in gas supplies from Russia and the fall in market prices. German storage facilities are 58 percent complete. “But if Russian gas supplies through the Nord Stream 1 pipeline remain at a low level of 40 percent, then the storage level of 90 percent by December can hardly be achieved without additional measures,” the ministry said.
Kremlin: Gas supply cuts not politically motivated
In view of the difficult gas supply, Moscow denies any guilt. “The Russian Federation is fulfilling all its obligations,” Kremlin spokesman Dmitry Peskov said, according to the Interfax agency.
PESCO again denied that the gas throttling by the Nord Stream 1 Baltic Sea pipeline was politically motivated. Rather, the delayed approval of repair work is the cause of the problem. According to Russian information, a Siemens turbine for the pipeline is stuck abroad.
Despite the alert announcement, utilities have not yet been given an opportunity to raise their gas prices under the Energy Security Act. Hebek said the mechanism also had a downside. So we are working on alternatives. If the regulation were activated, suppliers could pass on their additional costs to their customers within a week. This would make the old contracts, including those with price guarantees, obsolete.
Reserved coal power plants for electricity generation
The government intends to take several measures to prevent the gas crisis from worsening. Reserve coal-fired power plants are intended, among other things, to replace electricity generation from gas-fired power plants. The corresponding law is to be passed by the Federal Council on July 8th. “It’s painful. Coal-fired power plants are just poison for the climate. But we have to do this for a transitional period to save fuel and get through the winter,” said Hebek.
A credit line of EUR 15 billion will initially be made available to fill the storage facilities further. An auction model should make it more attractive for industrial consumers to save gas from heat.
Habeck: Hopefully there will never be gas rationing for industry
Rationing for industry should be avoided whenever possible. “It’s best not to happen in any month,” Hebek said, but added, “Obviously I can’t rule it out because what we’re doing is very necessary. But it’s not a scenario we’re working towards – on the contrary.”
Unions expressed concern. Peter Adrian, President of the Association of German Chambers of Industry and Commerce, said it was good that the federal government, despite existing contracts, did not allow high gas prices to be passed on to customers. A fair balance must be struck between suppliers and customers. The industry has a plan to reward gas savings.
The chemical industry, which accounts for 15 percent of gas consumption in Germany according to its industry association VCI, also called for a fair distribution of the burden. According to the VCI press release, the gas shortage poses major challenges for society and the economy. “It is important to develop a transparent process that distributes the unavoidable burdens as fairly and tolerably as possible to all gas consumers.”
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