Germany is 'getting us all hooked on Russian gas' says expert
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Volumes of Russian gas, which Germany relies on for 40 percent of its total supplies, have plummeted this week. Flows into the country through the Nord Stream 1 pipeline are currently at just 20 percent of normal capacity, having previously been reduced to 40 percent. But there are fears Russian supplies could get even tighter, with the possibility of Putin waging a political war and cut all of Europe’s gas in retaliation for sanctions.
Now, Germany appears to be preparing for the worst.
While Berlin had been scrambling to shield consumers from the impacts of plummeting Russian gas supplies, that now appears to be changing.
Starting from October, Germany plans to introduce a new levy which would help to split additional costs for replacing gas from Russia among all users.
This is a bid to shield gas traders from insolvency, who otherwise would have lost “millions a week” according to German Vice-Chancellor Robert Habeck.
Mr Habeck, who is also Germany’s Economy Minister, said: “This (price) difference is the levy.
“It is then passed on to the end consumer because otherwise the companies would permanently lose millions per week.”
But passing this on to households and industrial consumers with long-term contracts will leave them with rising bills as a result.
The draft law unveiled on Wednesday revealed that this levy would last until September 2024.
But gas importers will have to cope with the soaring prices alone until the levy kicks in.
According Mr Habeck, the levy will cost between 1.5 and 5 cents per kilowatt hour.
This could leave a four-person household with additional costs of up to €1,000 (£839) a year.
Mr Habeck said in a statement: “The challenges we are facing are enormous and they affect significant areas of the economy and society.
“We can only overcome them together.”
Mr Habeck has also said that while this will “biter news” for billpayers, it will also help to stabilise the energy market.
He said: “One doesn’t know exactly how much (gas) will cost in November, but the bitter news is that it’s definitely a few hundred euros per household.”
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However, Mr Habeck warned households will be pushed into poverty due to these rising prices must be protected, and promised to provide targeted relief measures.
More information about the levy is set to revealed in August.
This comes after EU members agreed on a voluntary reduction of gas consumption by 15 percent to prepare for slashed Russian supplies during the winter.
But for Germany, which has one of the highest dependencies on Russia in the entire bloc, this measure is evidently not enough.
While the gas squeeze will likely deal the largest blow to Germany as a result, Chancellor Olaf Scholz has been hammered for “getting us all hooked on Russian gas”.
Energy analyst Malcolm Grimston said on Talk TV: “Germany is getting us all hooked on Russian gas by its anti-nuclear policy. And nothing much has happened in the last few years to train my mind.”
Mr Grimston was likely referring to Germany’s aim to shut down its last remaining nuclear power plants by the end of the year.
Now, the country has been warned that it could be on the brink of a recession. According to data from the Germany’s network regulator, its gas storage facilities are 66.8 percent full.
But this is far below the Government’s target of 95 percent for November. With a current gas squeeze, as well as fears of a future cut, all of this could amount to the final nail in the coffin for the German economy.
Clemens Fuest, head of research institute ISF, said: “Germany is on the brink of a recession. High energy prices and the threat of gas shortages are weighing on the economy. Companies are expecting significantly worse business activity in the coming months.”
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