Germany fires up coal-fired power plants to avoid gas shortage as Russia cuts supply

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Germany will dramatically increase its use of highly polluting coal to preserve energy supplies ahead of winter as Russian gas export cuts threaten shortages in Europe’s biggest economy.

The German government said on Sunday it would pass emergency laws to reopen mothballed coal-fired power plants for power generation and auction off industry’s gas supplies to incentivize companies to reduce their consumption. The move illustrated the depth of concern in Berlin about possible gas shortages during the winter months.

“It’s bitter, but in this situation it is essential to reduce the use of gas,” said German Economy Minister Robert Habeck, a member of the Greens party.

Russia cut the capacity of the main gas export pipeline to Germany by 60% this week, causing repercussions across the continent as Western officials believe Moscow was arming its gas exports in response to EU sanctions. EU following the large-scale invasion of Ukraine.

Italy, which has also seen gas supplies plummet from Russia, is expected to announce emergency measures in the coming days if supplies are not restored.

Habeck said Berlin was working on a new law to temporarily bring back up to 10 gigawatts of idle coal-fired power plants for up to two years; this would increase Germany’s dependence on coal for power generation by up to a third.

“The situation is serious,” Habeck said. “It’s obviously Putin’s strategy to upset us, drive up prices and divide us. . . We will not allow this to happen.

The plan contradicts Germany’s climate policy; it aims to phase out coal by 2030 as it is much more carbon intensive than gas.

The three still active German nuclear power plants have a capacity of 4 gigawatts and should be disconnected from the grid by the end of this year. Their lifespan will not be extended as the government has concluded that the technical and security hurdles are too high.

Before the Russian invasion in February, Germany imported 55% of its gas from Russia.

In recent days, state-controlled Russian gas exporter Gazprom has cut supply volumes through the Nord Stream 1 (NS1) pipeline that crosses the Baltic Sea to Germany, blaming Canadian sanctions that have left pumping equipment maintained by Siemens Energy stranded in Montreal.

Germany and its allies in Europe rejected Gazprom’s claims, arguing that any technical problems were a pretext for Moscow’s retaliation against EU sanctions. Gazprom did not use alternative pipeline routes to compensate for the supply shortfall through NS1.

Gas prices in Europe, already close to record highs, rose further last week in response to the latest supply cuts.

Rising energy prices are fueling inflation and a cost of living crisis across Europe, which central banks are struggling to resolve without tipping the region’s economy into recession.

German Chancellor Olaf Scholz called the country’s dependence on Russian energy “a mistake of German economic policy” and told the DPA newswire that previous governments had failed to create alternative gas supply routes.

Germany plans to install four floating liquefied natural gas (LNG) terminals and has prioritized filling gas storage tanks that can be used in winter. Currently they are 56% full and Habeck wants to reach 90% by December.

“We must and will do everything to store as much gas as possible,” Habeck said, calling it “the highest priority” and adding that “it would be really tight in the winter otherwise.”

Germany aims to reduce normal consumption by about a fifth without resorting to rationing, while increasing Norwegian pipeline supplies and LNG imports.

However, this could still leave supplies dangerously tight, especially if it is a particularly cold winter. Average temperatures in Germany are 6°C or lower from November to April, according to the German gas regulator.

Analysts say German storage, if 90% full, could only cover two or three months of normal winter consumption if Russian supplies were completely cut off.

Germany will also introduce an auction mechanism for industrial gas users, Habeck said. Businesses that cut consumption will be compensated, a person familiar with the government’s plans told the Financial Times, but details are still being finalized.

Last year, gas-fired power plants accounted for 15% of German electricity production. At the end of May, Germany had 31.4 gigawatts of coal-fired power plants and 27.9 gigawatts of gas-fired power plants on the grid, according to regulatory data.

The 10 GW of mothballed coal capacity that will be put back on the grid represents just under 5% of total German generation capacity.

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