As German gas rationing looms, industry begs exemptions

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DUESSELDORF/FRANKFURT — Germany’s

network regulator, which would be in charge of gas rationing in

the event of a supply emergency, has received scores of

exemption requests from across industry, reflecting fears of

potential production cuts and subsequent losses.

Germany is at phase two of a three-stage emergency plan

following a reduction in gas flows from Russia, its main

supplier, a major problem for industry, which accounts for a

quarter of the country’s gas demand.

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Chancellor Olaf Scholz said on Tuesday gas prices, which

have soared due to uncertainty over Russian supplies, would not

come down again quickly as governments around the world see the

fuel as a bridge on their decarbonisation path.

While industry and regulators are trying to work out a plan

for what happens at phase three – when rationing kicks in –

individual sectors have started to ask for leniency and some

companies have begun changing work practices https://www.reuters.com/article/ukraine-crisis-germany-energy-autos-idAFL8N2ZI0LQ

to reduce energy use.

“An application procedure is not foreseen. The Federal

Network Agency continues to receive numerous letters from

virtually all sectors,” a spokesperson for Germany’s network

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regulator (BNetzA) said in e-mailed statements.

“Blanket exemptions are not provided for in the current

law,” the spokesperson said, adding the regulator maintained “a

constant dialog” with industry to prepare for a gas supply

emergency.

Big gas consuming sectors that have raised their voices

publicly are the glass, steel, pharmaceutical and chemical

industries, where gas is used to make everything from plastics

and fertilizer to fibers and solvents.

Around 120 of BNetzA’s staff are working on crisis

prevention and management.

Russia’s Gazprom is supplying 20% of the usual

capacity of the Nord Stream 1 pipeline, which normally carries

around a third of Russian gas exports to Europe, in an energy

stand-off rooted in Moscow’s invasion of Ukraine.

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The regulator has started to collect data from Germany’s

largest industrial players, an effort it said had drawn a “very

high” level of participation of 2,750 companies.

BNetzA has said it is trying to put together a shutdown list

for industry based on six criteria https://www.reuters.com/article/ukraine-crisis-germany-gas-idUKL5N2X94QM,

which include a company’s size, economic damage as well as

costs and how long it would take to restart specific facilities.

“Everyone is now clear about how serious the situation is,”

said Alexander Theusner of law firm Roedl & Partner, who has

been advising clients to draw up the letters.

When it comes to the crunch, private households will have

some but not all-encompassing priority over industry, while

hospitals, care facilities and other public sector institutions

with special needs would be last to be disrupted.

(Reporting by Tom Kaeckenhoff, Vera Eckert and Christoph

Steitz; Additional reporting by Andreas Rinke; Editing by

Barbara Lewis, Mark Potter and Emelia Sithole-Matarise)