Germany faces natural gas ‘crisis’, raises warning level

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BERLIN. On Thursday, Germany launched the second phase of its three-phase emergency natural gas supply plan, warning that Europe’s largest economy was facing a “crisis” and that winter gas storage targets were in jeopardy after Russia cut energy supplies to several countries.

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The government said the decision follows Russia’s cuts in natural gas supplies that began last week and rising energy prices fueled by the war in Ukraine. Industrial consumers are being asked to reduce the amount of natural gas they use, and Germany and other countries are turning back to coal as a substitute, jeopardizing Europe’s climate goals as energy tensions between Russia and the West escalate.

“Even if we don’t feel it yet, we are in a gas crisis,” said Economy and Energy Minister Robert Habeck.

Last week, Russia cut natural gas supplies to Germany, Italy, Austria, the Czech Republic and Slovakia as countries in the European Union scramble to replenish supplies of fuel used to generate electricity, energy and heat homes during the winter. Russian state energy giant Gazprom blamed a missing part sent to Canada for repairs as it cut flows by 60% through the Nord Stream 1 pipeline that runs under the Baltic Sea to Germany, Europe’s largest natural gas pipeline.

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Other countries, including Austria and the Netherlands, have also launched early stock warnings and urged people to save money. Germany and Italy, two of Europe’s biggest buyers of Russian gas, called the cuts in Russian gas politically motivated and warned that it could further slow the economy.

“We are in an economic conflict with Russia,” Habek said, accusing Moscow of trying to destroy European unity and the solidarity it has shown Ukraine.

The cuts come in addition to gas shutdowns in Poland, Bulgaria, Denmark, Finland, France and the Netherlands in recent weeks.

The German government said current gas needs are being met and its storage facilities are 58% full, higher than at the same time last year. But reaching 90% by December will be impossible without additional measures, the report says.

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According to Habek, Germany will not cut off neighboring countries. Instead, he urged industry and residents to reduce consumption as much as possible.

“Prices are already high and we need to be prepared for further increases,” Habek said, warning that “this will affect industrial production and be a big burden for many manufacturers.”

Despite this, Germany’s energy industry lobby group BDEW said it supported the government’s decision. Calculations show that enterprises have already reduced their demand by 8% in recent months. To encourage further savings, the government is planning to hold auctions where large industrial customers pay for giving up their contracts.

Habek said the measures taken, including providing large loans to gas distributors and utilities to deal with price spikes, were necessary to prevent energy markets from collapsing.

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Imposing the highest level of danger could force Germany to ration gas to industrial consumers to save homes, schools and hospitals, and deal a severe blow to the economy.

Habek said people can do their part by adjusting their home’s heating system now and saving up to 15% during the colder months.

“Sometimes it sounds banal, but this banality needs to be multiplied by 41 million households,” he said.

Since the announcement of the first phase of its emergency plan in March, Germany and other countries have been trying to get additional gas from neighbors such as the Netherlands and Norway, as well as liquefied natural gas from producers outside Europe, including the United States, as the EU looks to reduce dependence on Russia by two thirds by the end of the year.

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To the dismay of environmentalists, on Sunday the German government announced it would increase the burning of more polluting coal and reduce the use of gas to generate electricity.

According to Carlos Torres Diaz, senior vice president of Rystad Energy, the existing coal generation capacity, which can be restored, could provide 9% of the country’s electricity needs and save a quarter of the gas used by industry.

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The Netherlands will also allow coal-fired power plants to run at full capacity again to save gas that would otherwise be burned to generate electricity.

Habek has partly blamed the political decisions of past German governments to rely on Russian energy supplies and the failure to find alternatives.

“How different it would be if we really made significant progress in energy efficiency and increased use of renewable energy over the past few years, and not just stood still,” he said.

His ministry recently unveiled a package of measures to accelerate the uptake of solar and wind power in Germany. However, the government has so far ruled out keeping the three remaining nuclear plants operational beyond the end of this year.

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