Germany Sounds the Alarm

Triggers "alert level" due to Russian cutoff; coal could be used as stopgap

As the Russo-Ukraine War drags on into what some frontline soldiers are calling "the meat grinder" stage, effects of the conflict are reaching further into the global energy supply dynamic. The latest evidence of this came Thursday, when German Economy Minister Robert Habeck announced that his country will move to stage two of its emergency gas plan.

In a statement, Habeck communicated German concerns over long-term gas supply, specifically citing "really tight" projections for his country's gas supply come winter, and proposing coal-fired plants as a stopgap solution for multiple European countries.

“We mustn’t delude ourselves: cutting gas supplies is an economic attack on us by [Russian President Vladimir] Putin,” Habeck said in a statement, according to a translation by Reuters. “We defend ourselves against this. But it will be a rocky road that we as a country now have to walk. Even if you don’t really feel it yet: we are in a gas crisis,” he added. Habeck noted the scarcity of gas for everyday consumers and businesses alike while warning of an ensuing price rally. “This will affect industrial production and become a major burden for many consumers. It’s an external shock,” Habeck said.

According to Germany’s emergency gas plan, the alert level phase is triggered when there is a “disruption of gas supply or exceptionally high gas demand which results in significant deterioration of the gas supply situation occurs but the market is still able to manage that disruption or demand without the need to resort to non-market-based measures.”

This phase does not call for state intervention measures. These kick in at the “emergency phase” of stage three, if the government judges that market fundamentals no longer apply.

Germany declared the first phase of its emergency gas plan on March 30, roughly one month after Russia’s invasion of Ukraine triggered an energy crisis in Europe.