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Germany triggers ’emergency level’ of emergency gas plan, sees high risk of long-term supply shortage

Written by Javed Iqbal

Habeck has previously warned that the situation will be “really tight in the winter” with no precautions to prevent shortages of gas supply.

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Germany has stated that it is moving to the so-called “emergency level” in its emergency gas plan, as reduced Russian currents exacerbate fears of a lack of winter supplies.

Economy Minister Robert Habeck announced Thursday that Germany would go to stage two of its three-stage plan. This means that Europe’s largest economy now sees a high risk of long-term gas supply shortages.

Germany has seen a sharp drop in Russian gas supplies, prompting the country to warn that the situation will be “really tight in winter“without precautions to prevent supply shortages.

“We must not deceive ourselves: cutting back on gas supplies is an economic attack on us [Russian President Vladimir] Putin, “Habeck said in a statement, according to a translation.

“We are defending ourselves against this. But it will be a rocky road that we as a country must now walk. Even if you do not really feel it yet: we are in a gas crisis,” he added.

Habeck said gas had now become a scarce commodity and warned that an extraordinary price rise could continue. “This will affect industrial production and become a huge burden for many consumers. It is an external shock,” Habeck said.

According to Germany’s emergency gas planthe alarm level phase is triggered when there is an “interruption of gas supply or an unusually high gas demand, which results in a significant deterioration of the gas supply situation, but the market is still able to handle this interruption or demand without having to resort to non-market measures. “

This phase does not require government intervention measures. These start in the “emergency phase” of phase three if the government assesses that the market fundamentals no longer apply.

Politicians in Europe are currently struggling to fill underground warehouses with natural gas supplies to provide households with enough fuel to keep the lights on and homes warm before the cold returns.

The EU, which receives about 40% of its gas via Russian pipelines, is rapidly trying to reduce its dependence on Russian hydrocarbons in response to the Kremlin’s months-long attack on Ukraine.

Germany, which is heavily dependent on Russian gas, had previously sought to maintain robust energy relations with Moscow.

‘Coal burns again’

Germany declared the first phase of its emergency gas plan on March 30thabout a month after Russia’s invasion of Ukraine triggered an energy crisis in Europe.

The “early warning phase” acknowledged that although there were no supply disruptions yet, gas suppliers were invited to advise the government as part of a crisis team. At the time, Habeck urged all gas consumers – from industry to households – to reduce their consumption as much as they could.

Together with Italy, Austria and the NetherlandsGermany has indicated that coal-fired plants could be used to compensate for a cut in Russian gas supply.

Coal is the most carbon-intensive fossil fuel in terms of emissions and therefore the main target for replacement at the hub of alternative energy sources.

Germany, Italy, Austria and the Netherlands have all indicated that coal-fired plants could be used to compensate for the cut in Russian gas supply.

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Habeck said last week that the government’s decision to limit the use of natural gas and burn more coal was a “bitter” move, but the country must do everything it can to store as much gas as possible.

“Coal is on fire again,” Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC’s “Squawk Box Europe” on Thursday. “Manufacturers had been geared for a future with lower demand, but that’s obviously not what we’re seeing right now.”

Speaking ahead of Germany’s transition to the emergency phase of its emergency gas plan, Hansen said the declaration would confirm the predicament Europe is in with coal seen as a “short-term solution” to replace reduced flows of Russian gas.

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Javed Iqbal

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