Germany turns to coal as Russia puts pressure on gas supplies
Germany will ramp up coal supplies and offer heavy subsidies to gas giants to ensure the country can meet its energy needs this winter, amid escalating concerns that Russia could cut off supplies into the country.
The government has passed emergency laws to reopen mothballed coal plants for electricity generation, and auction gas supplies to industry to incentivise businesses to curb consumption.
It will also provide €15bn in credit lines for Germany’s gas market operator to fill gas storage facilities faster, according to news agency Reuters.
Economy Minister Robert Habeck revealed that bringing back coal-fired power plants could add up to 10GW of capacity in case of a critical gas supply situation.
He said: “That is painful, but it is a sheer necessity in this situation to reduce gas consumption. If we don’t do it, then we run the risk that the storage facilities will not be full enough at the end of the year towards the winter season. And then we are blackmailable on a political level.”
The measures are expected to be voted through Germany’s upper house of parliament on July 8.
This follows Russia cutting capacity on Nord Stream 1, its main gas export pipeline to Germany, by 60 per cent last week – with growing fears within the European Union (EU) that the Kremlin is now weaponising gas exports.
Earlier this year, Russian President Vladimir Putin signed into law requirements for “unfriendly” overseas buyers to pay for Russian gas in roubles.
While Germany energy giants such as Uniper complied through a murky conversion system, other companies have refused – causing Gazprom to cut off or reduce gas flows into Poland, Bulgaria, Finland, Denmark and Netherlands.
The trading bloc relies on Russia for around 40 per cent of its imports, with Germany depending on the country for around half its overall purchases.
Even though it has imposed a coal and oil embargo, the EU has been hesitant to impose any measures on gas supplies – with only Lithuania banning imports from Russia.
Since the invasion of Ukraine, the EU has spent €26.4bn on Russian natural gas.
This comes after a challenging Christmas period when the bloc staved off supply shortages amid Russian shortages only through top-ups in liquefied natural gas from US tankers.
Europe scrambles to secure supplies as winter looms
Economy Minister Robert Habeck revealed that more action could be taken if the situation worsens – raising the prospect of the second phase being triggered in its early-phase emergency gas plans, which were triggered in April.
The second phase – which kicks in when there is a high risk of long-term supply shortages of gas – would enable utilities to pass on high gas prices to customers and thereby help lower demand.
The emergency measures could eventually lead to the government taking control of supplies and divvying them out to households.
“The tense situation and the high prices are a direct consequence of (Russian President Vladimir) Putin’s war of aggression on Ukraine,” Habeck said in a statement.
“What’s more, it is obviously Putin’s strategy to make us insecure, to drive up prices, and to divide us. We will not let that happen. We will fight back decisively, precisely and thoughtfully.”
Germany is seeking to fill its gas storage facilities and to phase out Russian energy imports – and is targeting 80 per cent capacity in its storage systems by October.
Data from Gas Infrastructure Europe shows German gas storage levels at 57 per cent, up from 29.7 on February 24 – the day Russia invaded Ukraine.
It is not the only country that has turned to coal in the current crisis – the UK last week extended the life of West Burton Power A Station in Nottinghamshire into winter, one of just three remaining coal plants in the country.
Germany’s neighbour Austria has agreed with domestic utility giant Verbund to convert a reserve, gas-fired power plant so it can produce electricity with coal should restricted gas supplies from Russia result in an energy emergency.
Italy is expected to announce emergency measures in the coming days if supplies are not restored – having also seen supplies fall.