German gas rationing would hit metals, chemicals hardest

Gas rationing in Germany would impact the metal production and processing, chemical and paper industries most severely, according to a study on Thursday, amid heightened uncertainty over Russian supply via the key Nord Stream 1 pipeline.

Limited gas supply could also impact less energy-intensive but economically important sectors due to a lack of upstream products, said the ZEW economic institute, which compiled the analysis on behalf of the Foundation for Family Businesses in Germany.

The textiles and ceramics industries are very dependent on gas, the institute added.

“If their supplies fail to materialize, even industries with high value added quickly find themselves in distress,” said the head of the foundation, Rainer Kirchdoerfer.

He called on Germany to retain its status as a location for supplier industries, adding: “With creeping de-industrialization, we would only replace the dependence on gas with a new dependence on other imported products.”

Data published by the Federal Statistical Office on Thursday underscored Germany’s reliance on natural gas, which was a major energy source for industry in 2020, when it accounted for 31.2% of consumption.

In 2021, 95% of natural gas in Germany was imported, the office added.

Germany has been scrambling to find alternatives to Russian energy imports since the war broke out in Ukraine on Feb. 24, particularly in terms of gas, deliveries of which have been throttled by Russia in recent weeks.

The gas crunch came into sharper focus on July 11, when Nord Stream 1 flows dried up due to scheduled maintenance work.

This work ended on Thursday, when physical flows through the Russian-German pipeline could return to a pre-maintenance level of 40% capacity, according to the network regulator.