Russia’s main gas pipeline to Europe, the Nord Stream gas pipeline, will be shut down for ten days for maintenance starting July 11, but Germany is already bracing for the possibility that Vladimir Putin will seize the opportunity to immediately shut off the supply.
The German government has an emergency plan that includes rationing and bailouts of companies, but according to Bloomberg, the consequences of this will most likely mean a deep recession in Europe’s largest economy with consequences for the entire continent.
“Are we concerned? Yes, we are very concerned. It would be naive not to worry,” Christian Kuhlmann, CEO of German chemical giant Evonik Industries AG, told the agency.
More than a third of Germany’s gas comes from Russia, and the Kremlin could use that advantage to avenge sanctions imposed by Europe after the war in Ukraine.
“Russia has a limited number of assets that it can use. They are trying to make the most of the remaining tools,” says Olga Khakova, Deputy Director of the Atlantic Council’s Global Energy Center.
Germany gradually prepared its 80 million citizens for the opportunity to face hardship. Chancellor Olaf Scholz even compared the current situation to the peak of inflation in the 1960s and 1970s and warned that it was not something that could be overcome quickly.
The impact of the lack of energy is already beginning to be felt: Munich has lowered the temperature of public swimming pools, Cologne has reduced the intensity of street lighting, and Hamburg plans to supply hot water only at certain times of the day.
The Scholz government is trying to speed up legislation that would allow him to buy stakes in struggling energy companies like Uniper to buy them out. Uniper, Germany’s largest buyer of Russian gas and the main state supplier, warned on Friday that it was running out of cash.
Klaus-Dieter Maubach, CEO, says the company will soon have no choice but to start using gas reserves, raise prices for consumers and cut supplies.
The government has already promised to intervene. “We will not allow systemically important companies to go bankrupt and, as a result, sink the global energy market,” Economy Minister Robert Habek said in response to Uniper warnings.
To avert a crisis, Germany will also backtrack on its environmental commitments by reopening coal-fired power plants to generate electricity, allowing the country to cut its gas use for power generation by 52% over the next 12 months, according to Bloomberg estimates.
If Germany decides to declare a “state of emergency”, the regulator can now control distribution. Homes and critical structures such as hospitals are protected, but the industry may be facing limited supplies and consumers may have to lower the temperature of heaters and water heaters.
Germany’s goal is to fill warehouses by 90% by November. At the moment they are 63%, and with the suspension of Nord Stream, this value should decrease, which will give the country only 86 days to reach its goal.
The German Government is well aware of the difficulties of achieving this goal. “It was a serious mistake to let Germany become so dependent on one country for energy supply, and that country was Russia. This dependence on Russian gas has been built over decades and we are trying to change that in months,” Habek lamented.
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