Germany Steps Up Measures to Conserve Gas as Russia Slows Supply to Europe

BERLIN—Germany will restart coal-fired power plants and offer incentives for companies to curb natural gas consumption, marking a new step in the economic war between Europe and Russia.

Berlin unveiled the measures Sunday after Russia cut gas supplies to Europe last week as it punched back against European sanctions and military support for Ukraine.

The steps, part of a broader strategy initiated after the invasion of Ukraine, aim to reduce gas consumption and divert gas deliveries to storage facilities to ensure that the country has enough reserves to get through the winter.

Russia’s gradual cutting of gas supplies has raised the specter of a potential fuel shortage if Europe goes into winter with less-than-full stowages. It has also raised prices, putting additional pressure on economies that are already struggling with high inflation and rising borrowing costs and face the prospect of a recession.

Nord Stream, the main channel for Russian fuel to Europe, has reported a sharp drop in gas supplies.

“It is obviously Putin’s strategy to rattle us, drive up prices and divide us. We won’t allow that. We will defend ourselves resolutely, precisely and thoughtfully,” said

Robert Habeck,

Germany’s economy minister.

A natural gas storage facility in Germany. Russia’s gradual cutting of supplies has raised the specter of a potential fuel shortage.



Photo:

David Hecker/Getty Images

Gazprom has blamed the shortfall on missing turbine parts that were stuck in Canada due to sanctions. European officials and analysts dismissed the explanation.

Germany imports about 35% of its natural gas from Russia, down from 55% before the war, and uses most of it for heating and manufacturing, according to German government estimates. Last year, power generation using natural gas accounted for about 15% of total public electricity in Germany, Mr. Habeck said, adding that the share of gas in power production has likely fallen this year.

To accelerate the decline of gas in the power mix, Mr. Habeck outlined a number of steps the government was taking to reduce reliance on gas and build up stores for the coming winter.

In a U-turn for a leader of the environmentalist Green Party, which has campaigned to reduce fossil-fuel use, Mr. Habeck said the government would empower utility companies to extend the use of coal-fired power plants.

This would ensure that Germany has an alternative source of energy but would further delay the country’s efforts to slash carbon emissions.

“This is bitter,” Mr. Habeck said of the need to rely on coal. “But in this situation, it is necessary to reduce gas consumption. Gas stores must be full by winter. That has the highest priority.”

The legislation affecting the use of coal is expected to be approved on July 8 in the Bundesrat, the upper house of parliament, Mr. Habeck said. The measure expires on March 31, 2024, by which time the government hopes to have created a sustainable alternative to Russian gas.

Mr. Habeck also said the government would introduce an auction system that would motivate industry to reduce consumption.

The government released no details about how the auction would work, but Mr. Habeck said it would begin this summer.

Rising oil costs have helped push the national average price for a gallon of gasoline to $5 for the first time, and that’s leading to increased inflation pressure across the U.S. economy. Photo illustration: Todd Johnson

Mr. Habeck said the new measures are aimed at diverting the dwindling gas deliveries from Russia into storage tanks to be used during the winter. Germany is aiming to have its gas storage facilities 90% full by December. Currently, Germany’s gas storage facilities are about 56% full, Mr. Habeck said.

The measures come on top of a variety of previously announced steps aimed at reducing Germany’s reliance on Russian gas. Under plans drafted earlier, the government could ration gas for industrial users should it run out of it in the winter.

The government has made arrangements to purchase gas from non-Russian sources and is accelerating the construction of a liquefied natural gas terminal in the North Sea near Wilhelmshaven.

Mr. Habeck said that two of the planned four special ships to convert liquefied natural gas that can be fed into the German grid would become operational this winter, allowing the country to replenish gas supplies independent of Russia.

Write to William Boston at [email protected]

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