Germany's acute energy crisis is largely due to the country's former chancellor Angela Merkel, touted as one of the tallest leaders of her times. Merkel, who was at the helm of affairs from 2005 until last year, did little to diversify Germany’s gas supplies. Her decision to move away from nuclear and coal only increased Germany’s dependence on Russian gas. In fact, Foreign Policy magazine wrote that Germany’s Energiewende—or energy transition has been taken as a “shining example of how to green the energy supply.”
The deepening energy crisis in Europe has now ended Germany’s three decade run of a trade surplus. Data released this month showed that in May, the country slipped into deficit for the first time in more than 30 years, driven by surging energy prices and shrinking supplies.
Germany’s trade balance for 2021 was $233.64 billion, an increase of 6.09 per cent over 2020 when it recorded $220.22 billion.
“Germany, in particular, is in crisis mode and will likely see much worse, as its entire economic model—based on energy-hungry manufacturing, cheap Russian gas, and a self-mutilating shutdown of nuclear energy that Berlin still won’t reverse—is on the verge of collapsing without a plan B,” Foreign Policy added.
Most of the European gas storage facilities that were managed by Russian energy major Gazprom, had been gradually emptied out, leading to price surge and shortage. The exercise began last year–much before Russia’s invasion of Ukraine.
To add to the problem, Nord Stream 1, Europe’s key pipeline for Russian gas has not been in operation for the last 10 days. This critical gas pipeline has now shut for maintenance. Though it is slated to resume tomorrow, news agency Reuters said that its capacity could be “further reduced due to slow progress in equipment maintenance.” Germany has been getting over 55 per cent of its annual gas supplies from Nord Stream 1, Europe’s key pipeline for Russian gas.
Two analysts told India Narrative that a large chunk of the problem has been caused by Merkel and her team. “Energy strategy needs to be well thought out and scientific and not emotional,” one of them said, adding that the worse is yet to come.
The European Union’s largest economy is now staring at a recession. Several cities in Germany could resort to rationing hot water for its citizens but the energy shortage has hit its manufacturing industry as well.
“The problem is deeper than what is being anticipated or projected. The country is likely to actually slip into recession with this acute energy shortage. This would also impact growth in the European Union,” an analyst told India Narrative.
Fatih Birol, Executive Director, International Energy Agency warned that the situation is “especially perilous in Europe, which is at the epicentre of the energy market turmoil.”
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