Essay by Eric Worrall
As Germany braces for extreme economic and social hardship, it is worth reflecting on the misery the empty promises of green energy advocates have delivered.
Germany girds for gas rationing, Europe on edge in Russian standoff
By Joseph Nasr and Vera Eckert
- Europe fears Moscow will turn off gas supplies
- Kremlin says rouble payments a good idea for other commodities
- Kremlin says it will not immediately demand roubles for gas
- Economic standoff raises risk of recession in Europe
BERLIN/FRANKFURT, March 30 (Reuters) – Germany triggered an emergency plan to manage gas supplies on Wednesday under which Europe’s largest economy could ration power if a standoff over a Russian demand to pay for fuel with roubles disrupts or halts supplies.
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Russian President Vladimir Putin told German Chancellor Olaf Scholz by phone on Wednesday that nothing would change for European partners and payments would still be made in euros and transferred to Gazprom bank, a German spokesperson said. read more
Separately, Putin outlined the rouble plan in a phone call with Italian Prime Minister Mario Draghi, Draghi’s office said.
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INDUSTRY FIRST IN LINE FOR CUTS
Berlin’s unprecedented move is the clearest sign yet that the European Union is preparing for Moscow to cut gas supplies unless it gets payment in roubles. Italy and Latvia have already activated warnings.
German Economy Minister Robert Habeck implemented the “early warning phase” of an existing gas emergency plan, where a crisis team from the economics ministry, the regulator and the private sector will monitor imports and storage.
Habeck told reporters Germany’s gas supplies were guaranteed for now but urged consumers and companies to reduce consumption, saying that “every kilowatt hour counts”.
If supplies fall short, Germany’s network regulator can ration gas, with industry first in line for cuts and preferential treatment for private households, hospitals and other critical institutions.
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Who feels like opening a new business in Germany? When will the wind mills deliver the abundance and low costs green advocates keep promising?
Who still believes renewables are “cheaper than coal”?
It could all have been so different. If Europe had embraced nuclear power and fracking, they could have laughed off Putin’s gas supply threats.
I would like to report that Europe has woken from its delusions, but despite my early hopes, the messages are mixed. Politicians still haven’t got the balls to admit they were wrong. There has been some recommissioning of coal, but not nearly enough. The public line is any recommissioning of fossil fuel infrastructure is temporary.
Wake up Germany and Europe. You have a few short months of Summer to figure out how you will survive the coming energy supply crash. The one chance your politicians have to redeem themselves for decades of policy failures is to make this right. Because if that Russian gas supply goes down in winter, and you are still unprepared, some of your people freeze to death.
Update (EW): Fixed a typo (h/t Bob Tisdale)
Germany would probably have to pay Gazprom even if gas imports were stopped.
Hendrik Paulitz explains in his blog what is at stake in the event of an import stop:
“It’s mostly about long-term contracts with terms of 10 to 25 years with fixed quantities and prices. What’s more, these are so-called take-or-pay contracts in which the German importers have assumed an unconditional obligation to pay, regardless of whether the gas is actually imported or not. In other words, you have to pay for the amount of gas you have taken in advance for a number of years, whether or not it actually flows.
To accommodate fluctuations in demand (e.g., industrial cycles, temperatures, etc.), certain flexibilities are granted, often a corridor of 80 to 110 percent of the agreed annual volume, according to a consulting firm familiar with the modalities. In addition, monthly flexibilities are often agreed upon. Those who fall short of these volumes still pay for the quantities they have taken (but in some cases can then take them at a later date) – take or pay.
A former high-ranking manager in the gas industry confirms this: If one breaks such a supply contract, then an immediate due date would arise. This is not a question for an arbitration court, since it is not a discretionary decision. One could not escape the payment obligation.”
Translation by DeepL