Lack of Russian gas can bring German industry to standstill – minister

Germany will have to scale back or even shut down its industrial capacity if the deliveries of Russian natural gas through Ukraine stop next year, Economy Minister Robert Habeck said on Monday.

“There is no secure scenario for how things will turn out,” Habeck said at the Ostdeutsches Wirtschaftsforum (OWF), an economic conference in Bad Saarow. Policymakers in Berlin need to avoid “making the same mistake again” by assuming that energy shortages would not affect the economy, he said, as cited by Bloomberg. 

Even though Kiev has accused Moscow of aggression, Russia continues to abide by the gas delivery contract and pay Ukraine transit fees. However, given the current circumstances, it is extremely unlikely the contract will be renewed once it expires towards the end of 2024.

While Berlin claimed to have completely foregone Russian gas imports as of January, other EU countries still rely on Moscow for their energy needs. If Austria, Slovakia, Italy, and Hungary end up cut off, EU’s gas-sharing rules would require Germany to come to their aid, which would create problems for industrial users, Habeck explained.

Habeck argued that it was “essential” to build new liquefied natural gas (LNG) terminals on the Baltic coast, which would enable Berlin to import gas from the US and the Middle East. Local residents and environmental groups have sought to block the construction.

Habeck had championed alternative energy sources for months after Russia launched its military operation in Ukraine in February 2022. The Green Party politician became notorious for advising Germans to take fewer and shorter showers, because saving on hot water would “annoy” Russian President Vladimir Putin.

“Germany developed a business model that was largely based on dependence on cheap Russian gas,” Habeck told reporters last August, arguing that this also created a dependence on the “enemy” of international law and liberal democracy. That model had “failed and it is not coming back,” he said. 

Five weeks later, the Nord Stream pipelines supplying Russian natural gas to Germany were damaged in a series of underwater explosions. American journalist Seymour Hersh has accused the US of ordering and carrying out the sabotage, while Washington and its allies have tried to blame Moscow or speculate about “pro-Ukrainian groups” that might have done it, with or without Kiev’s official blessing.

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