Germany’s energy troubles began when the country followed the United States and most of the West in passing economic sanctions against Russia and providing military support for Ukraine. Russia retaliated by cutting gas supplies to Europe. (Related: EU’s embargo on Russian oil will cause oil prices to skyrocket – but Russia will be largely unharmed.)
Moscow has been gradually cutting the continent off of its much-needed supply of natural gas, raising the possibility of severe fuel shortage if Europe goes into winter with its fuel storage facilities less than full.
Berlin announced the measure to restart some coal-fired power plants following another cut to the country’s Russian-supplied gas. The steps are part of a broader strategy the country’s left-wing coalition government initiated following the invasion of Ukraine.
Part of the strategy is to incentivize companies to curb their consumption of natural gas, believing that reducing gas consumption can reduce the country’s reliance on Russian natural gas. Most subsequent gas deliveries will be diverted to storage facilities to ensure that the country has enough reserves to get through the winter.
The legislation promoting the use of coal and incentivizing the curbing of gas consumption is expected to be approved on July 8 in the Bundesrat, the upper house of the German parliament. The measure will only last until March 31, 2024. By this time, Berlin hopes to have found a sustainable alternative to relying on Russian natural gas.
German Vice Chancellor and Minister for Economic Affairs and Climate Action Robert Habeck warned that if the country cannot divert enough natural gas to the country’s storage facilities, German gas supplies “could get tight in winter.”
Habeck added that gas storage facilities in Germany were around 57 percent full at the moment. The government is hoping to fill the storage facilities up to 90 percent of their capacity by December.
The government has made other proposals to reduce gas consumption, including putting a temporary cap on domestic heating and setting up a gas auction model to incentivize the saving of gas.
Under this scheme, industrial corporations that reduce their gas consumption will be rewarded with financial compensation. The gas saved will then be put into storage.
The left-wing government is also planning to create an additional credit line worth 15 billion euros ($15.77 billion) through state-owned bank KfW. This will enable the German gas market manager to buy gas from other sources to fill the country’s storage facilities
No comments:
Post a Comment