energy industry

As German gas rationing looms, industry begs exemptions

Reuters
As German gas rationing looms, industry begs exemptions

VIESSMANN. German Chancellor Olaf Scholz stands with an employee at a production line during his visit to the plant of German gas heating manufacturer Viessmann in Allendorf, Germany, August 9, 2022.

Fabian Bimmer/Reuters

Big gas-consuming sectors in Germany that have raised their voices publicly are the glass, steel, pharmaceutical, and chemical industries

Germany‘s network regulator, which would be in charge of gas rationing in the event of a supply emergency, has received scores of exemption requests from across industry, reflecting fears of potential production cuts and subsequent losses.

Germany is at phase two of a three-stage emergency plan following a reduction in gas flows from Russia, its main supplier, a major problem for industry, which accounts for a quarter of the country’s gas demand.

Chancellor Olaf Scholz said on Tuesday, August 9, gas prices, which have soared due to uncertainty over Russian supplies, would not come down again quickly as governments around the world see the fuel as a bridge on their decarbonization path.

While industry and regulators are trying to work out a plan for what happens at phase three – when rationing kicks in – individual sectors have started to ask for leniency and some companies have begun changing work practices to reduce energy use.

“An application procedure is not foreseen. The Federal Network Agency continues to receive numerous letters from virtually all sectors,” a spokesperson for Germany’s network regulator (BNetzA) said in emailed statements.

“Blanket exemptions are not provided for in the current law,” the spokesperson said, adding the regulator maintained “a constant dialogue” with industry to prepare for a gas supply emergency.

Big gas-consuming sectors that have raised their voices publicly are the glass, steel, pharmaceutical, and chemical industries, where gas is used to make everything from plastics and fertilizer to fibers and solvents.

Around 120 of BNetzA’s staff are working on crisis prevention and management.

Russia’s Gazprom is supplying 20% of the usual capacity of the Nord Stream 1 pipeline, which normally carries around a third of Russian gas exports to Europe, in an energy standoff rooted in Moscow’s invasion of Ukraine.

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The regulator has started to collect data from Germany’s largest industrial players, an effort it said had drawn a “very high” level of participation of 2,750 companies.

BNetzA has said it is trying to put together a shutdown list for industry based on six criteria, which include a company’s size, economic damage as well as costs, and how long it would take to restart specific facilities.

“Everyone is now clear about how serious the situation is,” said Alexander Theusner of law firm Roedl & Partner, who has been advising clients to draw up the letters.

When it comes to the crunch, private households will have some but not all-encompassing priority over industry, while hospitals, care facilities, and other public sector institutions with special needs would be last to be disrupted. – Rappler.com

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