Germany activates ‘alarm level’ over emergency gas plan, high risk of long-term supply shortage
Habeck has previously warned the situation will be “really tense in the winter” if precautions are not taken to prevent gas supply shortages.
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Germany announced it was moving into the so-called “warning phase” of its emergency gas plan, as a drop in Russian flows exacerbated fears of a winter supply shortage.
Economy Minister Robert Habeck announced on Thursday that Germany will move into phase two of its three-phase plan. That means Europe’s largest economy is now at high risk of a long-term gas supply shortage.
According to the planthe alert level period is triggered when there is “a disruption in gas supply or an exceptionally high demand for gas resulting in a significant deterioration of the gas supply situation occurring but the market is still manageable such disruption or demand without resorting to non-market measures.”
This phase does not call for state interventions. These start into the “emergency phase” of phase three, if the government determines that market fundamentals no longer apply.
Germany declares first phase of emergency gas plan above Mach 30, about a month after Russia’s invasion of Ukraine triggered an energy crisis in Europe. The “early warning phase” recognized that while there have been no supply disruptions, gas suppliers have been invited to advise the government as part of the crisis team.
At the time, Habeck urged all gas consumers – from industrial to household – to reduce their consumption as much as possible.
‘Coal burns again’
Germany has since seen a sharp drop in Russian gas supplies, prompting the country to warn that the situation would play out.winter is tight“without taking precautions to prevent supply shortages.
Together with Italy, Austria and the NetherlandsGermany has shown that coal-fired power plants can be used to make up for reduced Russian gas supplies.
Coal is the fossil fuel that uses the most carbon in terms of emissions and is therefore the most important target to replace in the transition to alternative energy sources.
Germany, Italy, Austria and the Netherlands have all indicated that coal-fired power plants can be used to make up for reduced Russian gas supplies.
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Last week, Mr Habeck said 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 to stockpile as much gas as possible. .
Policymakers in Europe are now trying to fill underground storages with natural gas supplies to provide households with enough fuel to light and heat homes before the cold is back.
The EU, which receives about 40% of its gas through Russian pipelines, is trying to rapidly reduce its reliance on Russian hydrocarbons in response to the Kremlin’s months-long offensive in Ukraine.
“Coal is on fire again,” Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC’s “Squawk Box Europe” on Thursday. “Manufacturers have been looking to a future of lower demand but that’s clearly not what we’re seeing right now.”
Hansen said Germany’s intention to move to the alarm stage over its emergency gas plan highlights the predicament facing Europe, with coal seen as a “short-term fix” to replace Russian gas flows are reduced.
