“It would be a catastrophe – a catastrophe that seemed almost unthinkable just two months ago, but at the moment it looks like a very realistic prospect,” said the owner of a high-tech engineering company in West Germany. The company produces everything from battery cases for electric cars to clutch systems. The speaker did not want to be named or identified by his company, partly out of fear, he said, adding that he seemed to support Russia’s war, arguing that if gas were shut down, his long-running business “would probably not survive”. But he says he is in a deep dilemma and feels very vulnerable, as he is not only heavily dependent on natural gas – the cost of which has already skyrocketed – but also on metals such as nickel and aluminum, much of which come from from Russia. Germany receives about 50 billion cubic meters a year or 55% of its natural gas from Russia, the largest by volume of any EU country, and consequently the largest share of any major European economy. Two possible, not unlikely scenarios are emerging: one predicts that Moscow will decide to cut or reduce supplies in retaliation for sanctions. The other sees Germany yielding to increasing pressure to support an EU energy embargo that recipients would effectively call Putin a bluff by cutting themselves off from Russian supplies. On Friday at the Brandenburg Gate, protesters in support of the oil and gas embargo backed up the moral argument with 410 red lights in memory of the victims of the Russian military assassination in the city of Bucha, along with slogans asking German Chancellor Anne S not now, when? “Their message is strong. As long as German industry continues to get the energy – for which it pays Moscow 200 million euros (7 167 million) every day – it helps finance the atrocities. However, industry bosses and political leaders have warned that the damage to Germany by closing the taps will far outweigh any benefits to Ukraine. “What good is a weakened Germany to anyone?” A source close to the government told the Guardian this week. Millions of private homes without heat are only part of the picture. The other, arguably greater concern, is gas-dependent construction giants such as Thyssenkrupp, BASF and Bayer. And the hundreds of thousands of small and medium-sized enterprises with which they are connected. Industry representatives have warned that the effects will be felt in every product, from building materials, synthetics, pesticides, disinfectants, packaging and semiconductors to the production of antibiotics, coronavirus vaccines and anti-cancer drugs. The chain reaction is difficult to predict, but may be significant. Finance Minister Robert Habeck urged the Germans to “lower the thermostat” – saying “every kilowatt hour Germany saves hurts Putin” – what some have cynically called a “freeze for Ukraine”. The industry is also called upon to limit its use. Some have already done so, due to the high energy costs. Others, such as the porcelain maker KPM, founded in 1763, work overtime to produce as many products as possible before the taps close. “Who knows how long we will have gas?” Its CEO, Martina Hacker, told Der Spiegel. “We can not produce porcelain without it.” Other companies have reduced production to a minimum. However, industries such as glassmakers say shutting down production facilities altogether is not an option, as it would cause liquids to coagulate and damage machines. The country’s 45 gas storage facilities are only about 26% full. The plan is to raise levels to 80% by the fall, largely saving energy now to secure supplies for next winter. Hubeck launched the first part of a three-point emergency plan last week that predicts a slowdown or shutdown of gas and decides where supplies will go. Hospitals, emergency services and medical device manufacturers will be given priority, followed by private households. The industries that use a quarter of the gas delivered to Germany will be the first to close, according to the plan. This is why companies are called upon to put forward their arguments about how “system related” they are. Law firms are flooded with questions from companies seeking to know their legal status, while industry associations say they are flooded with questions from members asking where they rank and how they should react to uncertainty. A spokesman said: “We have glass makers who say they are system-related because they provide the medical industry with glass vials, paper makers, arguing that their corrugated board is vital to the safe transport of vials. How can you disagree with them? “ The Federal Grid Service, which ensures fair access to gas, electricity and other vital services, sent a questionnaire to all German companies, asking them to effectively state their individual arguments for the right to gas. “The issue of hierarchy is a very difficult decision, which requires consideration of a wide range of consequences,” said a spokesman for the finance ministry. Some predict a bad battle over who deserves the most energy. There are visions of supply chain destruction – already under pressure due to the pandemic – that are collapsing completely, companies are being forced into bankruptcy, mass unemployment. The head of IG Metall, Jörg Hoffmann, a union representing 1.2 million workers in the chemical, metalworking and food industries, has warned of “a deeper recession than any we have known so far.” BASF, the chemical giant and one of Germany’s largest individual buyers and consumers of energy, said the effects of the cut in production would soon be felt. “We would have very high unemployment, a lot of companies would collapse,” said BASF President Martin Brundermüller. “It would lead to irreversible damage. To put it bluntly: it could lead Germany to its most serious crisis since the end of World War II and destroy our prosperity. “ A race against time is under way to find alternative sources of gas from the Netherlands and Norway and to increase liquefied natural gas (LNG) supplies from Belgium and the US terminals. Habeck was in Qatar to secure further missions and ordered the construction of LNG carriers at German ports instead of waiting for the construction of the proposed new LNG terminals, which will take a long time. The elimination of coal-fired plants – which is considered a central part of the climate emergency plan – may be further delayed. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk There is pressure to escalate and accelerate renewable energy projects into wind and solar. Companies like pharmacy giant Merck are making their own plans to build wind turbines and solar panels to increase their independence – even if only to heat their offices. But it is a huge effort that will probably take years and in the meantime Germany remains extremely vulnerable. Some companies are even considering moving their production facilities overseas, predicting that operating in Germany will become prohibitively expensive and raising fears that Europe’s economic engine is in danger of losing its competitive advantage. While Habeck believes that Germany will be able to wean itself off Russian gas in about two years, Brudermüller believes that four to five years are more realistic. Some experts say that by the end of the decade it is more likely.
