Berlin appears calm before the rise in gas prices and the alarm of the sector

The German government is looking for formulas to compensate the citizen for the foreseeable rise in gas, derived from the blockade of the German-Russian gas pipeline Nord Stream 2 in response to Vladimir Putin, while the industry warns of its medium-term effects.

The German Minister of Economy, the green Robert Habeck, defended this Wednesday the blockade of the Nord Stream 2 gas pipeline, which in his opinion and that of his party should never have been built, while trying to calm things down in the face of a rise in the gas bill gas that he recognizes as unavoidable.

“We will alleviate the momentary rise in the price of gas and its burdens on citizens and companies on the other hand”, Habeck, deputy chancellor in the government of Social Democrat Olaf Scholz, told German public radio Deutschlandfunk.

Habeck, at the head of the superministry of Economy and Climate since the change in power last December, guarantees that Germany has enough gas and that its supply is assured, since the appropriate measures have been taken to make it so.

As “Spiegel” progressed these days, there are enough reserves for the remainder of winter. The deputy chancellor even maintains that Germany can do without Russian gas altogether, although he admits that this would entail a high cost.

For Habeck, as for his co-religionist and head of Foreign Affairs, Annalena Baerbock, the suspension of the license for the entry into operation of Nord Stream 2 is a kind of complex victory. On the one hand, because even before the escalation of the Ukrainian conflict, her party rejected that gas pipeline; on the other, because it accentuates the fears of certain sectors that under the Greens everything becomes more expensive.

For Habeck, Nord Stream 2 should never have been built, because it is “a huge risk factor in the Baltic”. The now minister always warned that this gas pipeline implied a strong dependence on Moscow.

Farewell to Scholz’s ambiguity

Scholz announced yesterday the suspension of the certification process for the gas pipeline, whose construction was completed last year. The recognition of the breakaway republics of the Ukrainian Donbas by Russia made their entry into operation unsustainable, as both the US president, Joe Biden, and his green partners had warned him.

This represents a 180-degree turn in the policy towards Russia of both her conservative predecessor, Angela Merkel (2005-2021), and the Social Democrat Gerhard Schröder (1998-2005).

The 1,235-kilometre Nord Stream 2 was built to transport Russian gas directly to Germany without going through Ukraine, the same as the Nord Stream 1, which has been in operation since 2011.

The great project had been signed by Schröder and President Putin in April 2005, a few months before Merkel came to power.

Relations between the conservative leader and Moscow were much more difficult than under Schröder, who treated Putin as a friend and continues to defend that relationship. But despite the successive tensions between Moscow and Berlin or the annexation of Crimea, Merkel defended Nord Stream 2 as necessary for the energy transition towards renewables.

The blockade of the new gas pipeline occurs in the year in which Germany must close its last three nuclear power plants, according to the plan to abandon this energy source promoted by the red-green government of Schröder and assumed by Merkel.

The industry alerts

The Institute of the German Economy (IW) warns that Germany must increase its gas storage until next winter in the face of a possible cut in supply by Russia and also recommends speeding up the development of renewables

“In a normal case, Germany is well covered in the short term by its storage infrastructures and a good connection to liquefied gas terminals in neighboring countries such as the Netherlands,” IW points out in a study.

However, the situation could be problematic if the reservoirs are not full enough, as has been the case recently, or if the winter turns out to be particularly cold, the report warns.

“It is not possible to predict to what extent it is possible to divert liquefied gas to Europe in the event of a crisis”, pointed out Andreas Fischer, author of the study.

The IW recalled there that Germany imports more than half of the gas it consumes from Russia. And also that Germany is the main recipient of that gas: around 25% of Russian gas exports are destined for Germany.

Meanwhile, the CEO of the German energy supply company E.on, Leonhard Birnbaum, warned that a complete suspension of Russian gas supplies could affect German industry in the medium term.

“As of today, some companies would be disconnected from supply,” he told the weekly “Zeit.” The current impact would not be as drastic, since the cold season will soon be over, “but next winter, the energy industry probably would not be able to supply a number of customers without more,” he warned.