Germany is stepping up efforts to respond to a cut in Russian gas supplies by reviving coal plants and providing financing to secure gas for the winter, an effort that would cost about 15 billion euros (US$15.8 billion) at current prices.
The package of measures was announced days after Moscow slashed deliveries on its main gas link to Europe, hitting supplies to Germany and creating a knock-on effect for France, Austria and the Czech Republic. Austria responded to reduced flows by reviving a dormant coal power station.
Bringing back plants burning the heavily polluting fossil fuel is the latest sign of how Europe’s climate fight is taking a back seat as governments seek to hedge against energy shortfalls provoked by Russian President Vladimir Putin’s invasion of Ukraine.
Photo: AP
“It’s a sort of arm-wrestling in which Putin has the longer arm for now,” German Minister for Economic Affairs and Climate Action Robert Habeck — a member of the environmentalist Greens — said on ZDF television on late Sunday. “But that doesn’t mean that we can’t attain a stronger arm with effort.”
The heightened alarm was triggered after the Kremlin cut deliveries last week in apparent retaliation over Europe’s support for Kyiv. Flows through the Nord Stream 1 pipeline were reduced by about 60 percent as German Chancellor Olaf Scholz and counterparts from France, Italy and Romania traveled to Ukraine to support the country’s bid to join the EU.
Scholz’s administration, which had sought to accelerate Germany’s exit from coal, also plans to offer industry incentives to reduce gas consumption and make unneeded supplies available for storage.
The credit lines to refill reserves would be provided by state-owned lender KfW, the economic affairs ministry said on Sunday.
While the government did not immediately provide details on the size of the program, German gas storage is at about 57 percent of capacity. Buying the nearly 120 terawatt hours needed to top up the facilities would cost about 15 billion euros at current rates of 123 euros per megawatt hour.
Gas supplies yesterday for Italy’s Eni SpA have only been “partially confirmed.” Germany’s Uniper SE — the biggest buyer of Russian gas in Europe — has also said it was getting less than agreed.
Russia’s move led prices to surge more than 50 percent last week, creating concerns that inflation could get worse.
Since the beginning of the war in Ukraine, Germany has been preparing for a cut and has tapped resources, including securing floating terminals to import liquefied natural gas, to fill a possible supply gap. Europe’s largest economy still depends on Russia for 35 percent of its gas needs.
“Security of supply is currently guaranteed, but the situation is serious,” Habeck said, adding that supplies would be “really tight” in the winter without full reserves. “It’s obviously Putin’s strategy to unsettle us, drive up prices and divide us. We won’t allow that.”
A bill providing the legal basis to burn more coal for power generation is making its way through the Bundestag and should take effect soon after discussions in the upper house set for July 8.
In Austria, state-controlled Verbund AG was late on Sunday ordered to prepare its mothballed Mellach coal-fired station for operation.
The plant — 200km south of Vienna — was shut two years ago in a move that at the time made Austria just the second European country to eliminate coal entirely from its electricity grid.
Reviving coal is “bitter, but it’s simply necessary in this situation to reduce gas consumption,” Habeck said. “We must and we will do everything we can to store as much gas as possible in the summer and fall.”
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