Germany worries about gas rationing as supply from Russia halted
Germans are fretting about the coming winter freeze even while Europe sweats in record temperatures, amid uncertainty over whether a complete stopping of Russian gas deliveries would force energy rationing on private households as well as industry.

Germany, which has managed to reduce its reliance on Russian gas from 55% to about 35% of its demand since the start of the Ukraine war, is still heavily reliant on the Nord Stream 1 pipeline, which closed down for 10 days from 11 July due to scheduled maintenance works.

The two other pipelines that usually carry Russian gas to Germany are also currently not servicing the country. Gazprom in May ceased deliveries through the Yamal pipeline passing through Belarus and Poland, while the Ukraine-transiting Transgas, an extension of the Soyuz pipeline from Russia, is having deliveries to Slovakia and Austria prioritised.

Sources in Moscow told news agency Reuters on Tuesday that Nord Stream 1 was expected to resume operation on time, though at less than its capacity of about 160m cubic metres (mcm) a day.

However, if Vladimir Putin does not turn the tap back on at the end of the maintenance period on Thursday – as a majority of Germans expect, according to one recent survey – it would put particular strain on Europe’s largest economy.

“The worst-case scenario is that European countries will need to reduce their gas consumption by around 15%,” said Simone Tagliapietra, a senior fellow at the Brussels-based economic policy thinktank Bruegel.

Germany, however, would have to find reductions of almost 30%, or 20% if it manages to complete two floating LNG terminals in the North Sea ports of Wilhelmshaven and Brunsbüttel by the start of next year, as planned.

“If European states fall into Putin’s trap and we have a scenario of energy protectionism by the winter, the economic damage will be considerably worse,” Tagliapietra added.

A survey by public broadcaster ZDF, published last Friday, suggests the German public still strongly backs its government’s political support of Ukraine: 70% of respondents said they would stand by the country under attack from its eastern neighbour in spite of rising energy prices.

But a separate survey by pollster Forsa shows concerns about an energy crisis to have steadily grown as the war begins to drop from the forefront of people’s minds. As of last week, 58% of respondents identified shortages as the most important issue of the day, while 70% named the military conflict in Ukraine.

Whether the government of Olaf Scholz can counter-steer Russian attempts to sap German morale will also depend on whether it can communicate a clear strategy for how it will meet the looming energy crisis, said Alexander Sandkamp, an economist at the Kiel Institute for the World Economy.

“Currently there is a lot of angst among Germany’s population because there has been a lack of clear messages around how rationing would hit household consumers,” said Sandkamp.

Under current plans, private households would be protected from gas rationing along with other “protected” customers such as care homes or hospitals. The brunt of reductions would have to be made by German industry, accountable for about a third of the country’s gas use.

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Yet in recent weeks voices from the chemical and pharmaceutical industries have started to make public appeals, arguing that rationing their sector could set off domino effects with more catastrophic consequences.

“Making medical supplies is obviously more essential than making videogame consoles,” said Sandkamp. “But it’s very hard for the government to set these priorities via gas quotas.”

Instead, Sandkamp called for a more transparent mechanism that allows energy providers to pass their rising gas prices to consumers, forcing them into making savings of their own accord. Since many private households in Germany pay their gas bills on account to property management companies, rising prices are not as apparent to consumers as rising fuel prices at petrol stations.

Recent comments by Germany’s energy minister, Robert Habeck, suggest he may harbour some sympathies for such a view. On a recent trip to Vienna, the Green politician said private households too had to “play their part”, since a long-term stop of industrial production would have “massive consequences”.

In turn, Germany’s government would probably have to move to offer further cost of living subsidies. Steffi Lemke, the minister for consumer protection, recently proposed temporarily barring gas and electricity companies from cutting off customers who were unable to pay their bills.