The Energy Shock: Germany Plans for a Winter without Gas from Russia
The biggest problem here is private consumers, who are to a large degree protected by an EU directive. The government has few means available to it to force citizens to use their energy sparingly. As such, the government is relying on appeals rather than regulations.
It’s certainly difficult to imagine sending the police into companies to check on their gas consumption. And certainly not into private homes. The solution that the Chancellery is seeking to promote is the idea the country is going to be faced with an enormous challenge, but one that can be met with joint effort. It is to be Olaf Scholz’s equivalent to Merkel’s “we can do it” quote during the influx of hundreds of thousands of refugees in 2015, mostly from Syria.
But the appeals aren’t meant to mark the full extent of the measures. On Thursday, Economics Minister Habeck announced a series of savings targets that are to be legally binding. According to these, chimney sweeps are to check whether apartment buildings are still using old heating pumps. If so, they must be replaced. Experts are also to carry out steps to fine-tune gas heating systems to maximize energy efficiency using measures like hydraulic balancing.
In Germany, there is no regulation limiting how high thermostats can be turned up in the winter. Habeck has also said he doesn’t want to impose any steps that would encourage people to snitch on each other. But there is one thing he couldn’t resist: He wants to ban the owners of swimming pools from heating with gas. And even on that front, the Network Agency is uncertain whether it would actually deliver any results.
Germany’s state governments are also considering how they can save energy. In Baden-Württemberg, Governor Winfried Kretschmann organized a “gas summit.” The first measure: the government authorities themselves want to spur energy savings of 20 percent – room temperature in state facilities is to be lowered to the legal minimum, the use of warm water is also to be reduced. In Bavaria, the Construction Ministry has been tasked with creating a package of measures with which the state can save energy.
Large cities like Munich, Nuremberg and Augsburg long ago announced that the standard temperatures in public buildings are to be reduced, that they will partly turn off traffic lights and stop lighting up the facades of historic buildings.
Governor Markus Söder, however, doesn’t think much of the public appeals and of the savings quotas. Söder argues that small-scale proposals are “inadequate to the seriousness of the situation.”
Meanwhile, calls are being heard within the center-left Social Democratic Party (SPD) for a third relief package. Olaf Scholz is also supposedly in favor of a 5-billion-euro package, but is still holding back, because he still needs the approval of his coalition partners, especially the pro-business Free Democratic Party (FDP).
The FDP’s leader, Christian Lindner, remains standoffish. He has committed himself to the German government’s balanced budget law, and another deviation from it would offend a significant part of the electorate. According to one member of the coalition government, however, the finance minister has maneuvered himself into a dead end.
A Backup Plan Nobody Thought They Needed
As far as relief is concerned, Torsten Schmidt, an economic expert at the economic think tank RWI Essen, believes that policymakers have only a limited number of options. He says that what’s first important for stabilizing the overall economic situation is to contain inflation. “I don’t think broad-based stimulation of aggregate demand is appropriate at the moment,” he says. Such a measure, he argues, would exacerbate the upward pressure on prices. “However, purchasing power in lower income groups should be stabilized through transfers.”
Grimm, the economist, suggests that the government should step in to help companies that have either reduced or stopped their production due to the high energy prices. “As long as these interruptions are temporary, the companies could receive interim aid – as they did during the COVID crisis.” Grimm is opposed to immediately suspending Germany’s balanced budget act. “If you did that now, it would end up giving the impression that everything can be cushioned by the state, and that won’t be possible,” he says.
Klaus Müller of the Federal Network Agency has the same fear. Some days, he wonders how Germany actually got into this predicament. How could it be that German energy security is now dependent on so many contingencies.
When he started his job in February, no plans had been prepared. “We previously had not been ready for this scenario,” he says. The world’s fourth-largest economy was extremely dependent on Russian gas. Nobody seemed to think that a contingency strategy was necessary. So, there wasn’t one.
But Müller says it would be pointless to complain about that at this point. “We need to rise to the challenge,” he says. “After all, we aren’t defenseless against what is happening.”