US Stock Market
Euro Energy Crisis: Germany Using Coal instead of Gas
This winter, Europe's largest economy, Germany, will face an energy crisis unprecedented for developed countries. Apparently, in response to Western sanctions, Russia has gradually reduced gas supplies to Europe (especially to Germany), making the German economy more likely to slip into recession. In July, Germany's economy began to contract for the first time this year, an S&P Global measure of private sector activity showed.
After the Fukushima nuclear leak in Japan in 2011, former German Chancellor Angela Merkel decided to withdraw from atomic energy. At present, the instability of Russian gas supply caused by the conflict between Russia and Ukraine has prompted the remaining three nuclear power plants in Germany to continue to operate after the end of 2022 (the original outage time). In the first quarter of this year, nuclear power plants accounted for 6 percent of Germany's electricity generation, and natural gas for 13%.
To reduce natural gas consumption in the short term, Munich Electric Power Company has lowered the minimum temperature of outdoor and indoor swimming pools and enclosed saunas in Bavaria. Governments across Germany have also begun to consider compressing the living space of traditional projects such as beer making and Christmas markets. The world-renowned Munich International Oktoberfest will also be affected or tragically cancelled.
The German government has asked German companies and consumers to save energy to make up for the gap between gas inventory targets and actuals. But if measures to rebalance supply and demand fail, the German government has the power to declare a "gas emergency", which would involve state control of gas distribution and decisions about who gets gas and who doesn't.
At the same time, the German government has approved the restart of 10 coal-fired power plants and six oil-fired hybrid power plants, and postponed the phase-out of nuclear power, keeping German nuclear power plants running until 2024 to solve the problem of the energy crisis.
However, extending the life of a handful of reactors would only make a small contribution to alleviating the gas crisis. Sanctions and wars are really going to cost the whole German society quite a lot.
Louis Yap
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