Amid fears of an impending confrontation with Vladimir Putin over gas flows, German Economy Minister Robert Habeck convened a crisis team and warned consumers and businesses to cut consumption, telling them “every kilowatt hour” counts. As Europe’s largest economy, Germany is one of the EU members most dependent on supplies from Kremlin-controlled stocks, making it particularly vulnerable if the taps close. The European Union has pledged to cut Russian gas consumption by two-thirds before the end of the year, but there are concerns that the Kremlin could overtake the plan. Putin demanded that “unfriendly” countries pay for gas exports in rubles, in retaliation against the West for imposing deadly sanctions on Russia for its invasion of Ukraine. “If you want gas, find rubles,” Vyacheslav Volodin, the speaker of the lower house of the Russian parliament, said on Wednesday. The G7 countries have so far rejected demand, creating a stalemate that has put Europe on alert for a gas supply crisis. Habeck said he had activated the “early warning phase” of an existing gas emergency plan, meaning a crisis team from the Treasury, regulators and the private sector would monitor imports and storage. “We need to increase precautionary measures in order to be prepared for an escalation on the part of Russia,” Habeck said. “With the announcement of the level of early warning, a crisis team has been convened.” Hubeck said supplies were being protected at the moment, but urged consumers and companies to cut consumption, saying “every kilowatt hour counts.” Austria, which is even more dependent on Russian gas for its largest neighbor, has said it is tightening its grip on gas markets. The German stock market DAX fell almost 1.5%, with major manufacturers such as the owner Mercedes Daimler falling 2.6%, BMW 2.9% and the engineering company Siemens completing 3.3% lower. If supplies fall short, Germany’s grid regulator could take care of gas, with the industry leading the way in cuts. This threatens to send shockwaves through Germany’s heavily industrialized, export-oriented economy, with sectors ranging from automotive to chemicals heavily dependent on gas flows. Privileged treatment will be given to private households, hospitals and other critical institutions. Half of Germany’s 41.5 million households are heated by natural gas, while industrial users accounted for one-third of the 100 billion cubic meters (bcm) of national demand in 2021. Russia is Germany’s main gas supplier, accounting for 40% of imports in the first quarter of 2022. Berlin has pledged to end its energy dependence on Moscow, but will not achieve full independence by mid-2024. according to Habeck. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk In France, the head of the energy regulator said the country should not face supply problems and said there was no reason to panic. “Everything will be fine, the gas storage facilities are well stocked, we will be able to spend the winter,” Jean-François Carenco, head of CRE, told BFM TV. Russia is also a major supplier of diesel to European countries. Diesel distribution is possible in Germany and could even happen in the UK, Amrita Sen, a founding partner and chief oil analyst at research firm Energy Aspects, told the finance committee earlier this month.
