In reaction to declining Russian supplies, Germany activated the alarm phase of its emergency gas plan on Thursday, but it refrained from allowing utilities to pass on rising energy costs to consumers in Europe’s largest economy.
The move is the most recent in a series of escalations in the standoff between Europe and Moscow following Moscow’s invasion of Ukraine, which exposed the region’s reliance on Russian gas imports and triggered a mad dash for other energy sources.
The decision, which was made public by the economy minister, is a significant change, particularly for Germany, which has maintained close energy relations with Moscow dating back to the Cold War.
Although it shouldn’t happen, gas restriction is a possibility. This week, lower gas shipments prompted worries that Germany would experience a recession if Russia’s supplies were completely stopped.
Russian state supplier Gazprom (GAZP) has laid the blame for a delay in the return of serviced equipment on Western sanctions, denying that the decreases in gas supplies were planned.
When there is a substantial probability of ongoing supply shortages, the government initiates the second alarm stage of a three-stage emergency plan. Theoretically, utilities are able to pass on high rates to businesses and consumers, helping to reduce demand.
Since Gazprom stopped flows, there has been talk about a transition to the following phase.
Germany has been in Phase 1 of its emergency plan since late March due to declining gas deliveries from its primary supply. It puts more emphasis on filling gas storage facilities and stricter monitoring of daily flows.
The market can still function in the second stage without government involvement, which would otherwise bring on the final emergency stage.
Many European nations have laid out plans to endure a supply crisis, prevent winter energy shortages, and avoid a jump in inflation that might put the continent’s commitment to continue sanctions against Russia to the test.
In order to prepare for the possibility of running out of Russian gas, supply reductions have also forced German businesses to consider costly production cuts and turn to environmentally damaging energy sources that were previously unimaginable.
On Wednesday, the European Union hinted that it will temporarily use coal to make up for energy shortages, branding Moscow’s gas supply curbs as “rogue” actions.
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