German industry: Gas rationing plan would cripple economy
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Loading... - Pauline Roussel
- 31 Mar 2022
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Germany's industrial sector has sounded the alarm over a new emergency warning system to manage the country's energy security in case Russia cuts supplies of natural gas.
German Economy Minister Robert Habeck on Wednesday announced a three-stage alert system that would ultimately give households and hospitals priority over industrial firms if gas usage had to be rationed.
The Kremlin upped the stakes in its standoff with Europe last week, by saying that "unfriendly" states would have to pay for their gas in rubles instead of euros or dollars.
G7 nations rejected the demand but the uncertainty has sparked fears that Moscow may turn off the taps in retaliation for sanctions imposed by the West over the invasion of Ukraine.
Russia has since said that ruble payments will be phased in.
Disruption would spike unemployment
Business leaders and unions have warned that any disruption to gas supplies would be devastating for Europe's largest economy, as it has not yet fully recovered from the post-COVID supply chain crisis.
One worst-case scenario involves the world's largest chemical firm BASF, whose main chemical production site in the western city of Ludwigshafen would have to be partially or fully shut down.
President of Germany's IG BCE chemical workers union Michael Vassiliadis, who also sits on BASF's supervisory board, said around 40,000 employees would have to be put on short-time working hours or laid off.
"The consequences would not only be reduced work hours and job losses, but also the rapid collapse of the industrial production chains in Europe — with worldwide consequences," Vassiliadis added.
Christian Kullmann, head of the German Chemical Industry Association (VCI), also warned that chemical plants are so complex, they "can't just be switched off and on again like a microwave oven."
"Once chemical plants are shut down, they remain silent for weeks and months," he stressed. Kullmann, who is also head of the specialty chemicals company Evonik, said the disruption would have a "huge domino effect through almost all industries."
The chemical sector is a critical part of Germany's export-oriented economy as most industries cannot do without chemical products, including car manufacturers, pharmaceutical producers and construction firms.
Natural gas is also used both as a source of energy and as a raw material by chemical producers. No other sector utilizes more of Germany's gas supply than the chemical sector, at about 15%. Read More...
