Economy Minister Robert Habeck called the decision “bitter” but “necessary”. Germany will have to boost the use of coal for electricity production to make up for the shortage of natural gas from Russia, Economy Minister Robert Habeck said in a policy paper released on Sunday and cited by Deutsche Welle.
“To reduce gas consumption, less gas must be used to generate electricity. Coal-fired power plants will have to be used more instead,” the minister said in the paper. He deplored the need to use more coal to produce electricity, as Germany, along with other EU states, has been taking steps to curtail use of the ‘dirty fuel’ and move towards green energy, but, according to Habeck, the current situation is too serious to be picky.
“That’s bitter, but it’s simply necessary in this situation to lower gas usage,” he said. Berlin has been eager to make energy production in the country coal-free by 2030, but under the circumstances this goal may have to be changed.
The minister also noted that more gas should be brought into storage facilities, or “it will be really tight in winter.”
Gas storage facilities in Germany are around 57% full at the moment, according to the German media, citing the Federal Network Agency. Meanwhile, according to the paper, the German Ministry of Economy is working on a new regulation to establish a “gas replacement reserve” by upgrading power plants to be turned into storage sites. Several other mechanisms are in the works, including a gas auction and a loan worth €15 billion ($15.74 billion) for the purchase of additional gas.
The minister’s statements follow a decision by Russia’s Gazprom to cut natural gas deliveries to Germany via the Nord Stream pipeline by 60% after German maintenance provider Siemens failed to return pumping units after repairs due to sanctions.
Habeck, however, slammed this decision as political and linked to tensions between Russia and the West over Moscow’s military operation in Ukraine.
“It is obviously [Russian President Vladimir] Putin’s strategy … to drive the [energy] prices up and divide us,” he said in a separate statement to media last week.
Germany is planning to boost the use of coal to offset shrinking gas supplies from Russia, the media reports citing the economy minister RT Reports
As Mike Shedlock notes, those are two of seven points of Habeck’s plan.
He notes storage tanks are only 56% full.
Not to worry, that’s ahead of a year ago. But a year ago Germany was getting 100% of the gas it wanted from Russia. Now it’s only getting 40% of the gas it was getting a year ago.
That means it will take 2.5 times as long to fill up the tanks, thus the need to ration natural gas and use coal.
[Maybe Trump was right after all]
Transitional to What and When?
Well, don’t worry. This is only temporary.
Heaven only knows until when. Meanwhile, Germany is rushing to build floating LNG terminals.
That gas will come from where?
20% of US LNG Capacity Went Offline on June 8
On June 8, an explosion at the Freeport LNG facility in Texas knocked out 20% of US LNG production.
The outage sent US gas futures down 18% from the price a day before the fire. European gas prices shot up by over 60%.
Since then, US prices have fallen nearly 60 cents to $6.71.
[ZH: The chart below compares ‘oil barrel equivalent’ levels for EU and US NatGas relative to WTI Crude]
Spotlight on Sanctions
Sanctions on Russia has left equipment key for the functioning of the Nord Stream gas pipeline stuck abroad, signaling shipments via the crucial route to Germany may be curbed for some time https://t.co/8jiaC0EO9b
— Bloomberg (@business) June 14, 2022
No Parts, No Gas
3/ The word “sanctions” is not used, but @Gazprom‘s reasoning indirectly links the situation to @Siemens May 12 announcement that the company will wind down its operations in Russia. https://t.co/5kcZmDgoIC
— Alexander Gabuev 陳寒士 (@AlexGabuev) June 14, 2022
Global Natural Gas Flow
Yet again, I keep returning to the following picture.
Global map from Nations Online Project, annotations by Mish
Instead of getting natural gas from hundreds of miles away over existing pipelines we compress natural gas in the US then ship it 4,700 miles away Europe.
Meanwhile, Russia fearing eventual European cutoff is building new pipelines to China.
De-globalization is underway. A key ramification is higher inflation.
For further discussion, please see De-Globalization: New Supply Chains Are Inefficient and Will Drive Up Inflation
We have economic illiterates running the country and running the Fed. The average Joe is getting killed.
Dear President Biden, the above charts speak for themselves. If you want to lower inflation, stop the sanctions, Mike Shedlock concludes.