The impact of energy prices on German manufacturing and workforce shortages during the first three months of the Euro-Positron-Doubler crisis
Germany is bracing itself for a rough winter as soaring energy prices threaten to leave permanent scars on its manufacturing sector, a key engine of its economy.
Industrial production fell by 0.8% in August from the month before, according preliminary data released by the country’s statistics office on Friday. The office said that there are supply chain problems caused by the war in Ukraine and coronaviruses.
The chief economist at ING Germany said in a note that the economic contraction was inevitable, as energy prices remain high.
Germany’s manufacturing industry — which accounts for more than one fifth of the country’s economic output — is worried some of its companies won’t see the crisis through. Many are cutting production and some are laying off staff in a bid to cope.
When Russia invaded Ukraine in late February, energy prices shot up even higher, sparking an energy standoff between Europe and Moscow.
Frederick Persson, chief executive for central and eastern European at Prysmian Group, told CNN Business that he’d never seen an energy cost like that before.
The cost of energy has gone from being a cost in the business to something that can close the business down.
Gas Infrastructure Europe stated that Germany’s stores are 98% full, despite the fact that gas storage facilities there are full ahead of winter.
The country is likely to have to pay high prices next year as it will not have a regular supply of Russian gas, assuming people and businesses cut back on consumption in the winter, according to a report last week.
As employers battle high prices and shortages of gas, as many as two million workers will be taken off the job, according to a senior economist at the bank. That’s roughly one third of the numbers furloughed at the height of the pandemic in April 2020.
Energy Price Shocks in German Paper Industry: Recent Cuts to the Prysmian Employees and a Study by CEPI
Prysmian made permanent cuts to its workforce. He laid off 10% of his staff over the last three months in his region which covers Germany, Romania, Hungary and the Czech Republic.
“We might consider this time as the starting point for an accelerated deindustrialization in Germany,” Eric Heymann, a senior economist at the bank, wrote in the report.
According to a survey last month by the Confederation of European Paper Industries (CEPI), two-thirds of paper producers on the continent have cut their production, while just over half have temporarily closed.
Paper-making needs a lot of energy 24/7 to evaporate large quantities of water. Hakle blamed soaring energy and material costs for its insolvencies last month.
Many German manufacturers are small and medium-sized businesses — part of the country’s “Mittelstand” — and are often family-owned and deeply integrated into their communities. They are not able to absorb energy price shocks the same way as industry behemoths.
But big companies such as Prysmian, one of the world’s largest cable producers, are also struggling. Persson said he has cut production in his region by 5% over the past six months.
Source: https://www.cnn.com/2022/10/07/energy/german-industry-energy-prices/index.html
The German glass industry is at stake: Why the energy crisis is happening so fast, and why companies are moving away from Germany in order to avoid deindustrialization
There is help at hand. The German government has so far promised to spend nearly €300 billion ($294 billion) to help millions of households and businesses cope as prices soar. As much as €200 billion ($196 billion) of that support could be funded by government borrowing.
Such whopping sums have sparked criticism. The minister of energy in Luxembourg said last week that there was an insane race between governments to outspend each other.
“There’s a risk that essentially Germany subsidizing its glass industry will kill the Czech glass industry,” Georg Zachmann, a senior fellow at Bruegel, told CNN Business.
Germany believes that its giant economy is at stake, even thoughGenerous handouts have caused problems with its EU partners. Some manufacturers are already moving parts of their operations abroad.
Companies have relied on the steady flow of cheap gas from Russia since the 1990s to fuel their factories. That energy source is now “vanishing,” Zachmann said, pushing businesses to find alternate sources, or move energy-intensive activities to other countries.
Prysmian has done that. Persson moved gas-guzzling cable conductor production from Germany to Hungary and the Czech Republic in order to save money. He has started to buy parts from Turkey, rather than make them in-house, to cut energy consumption.
“[We are] trying to move away from Germany [for energy-intensive products] for the simple reason that it is very hard for us to sustain the production,” he said.
Similar pressures can be seen elsewhere in Europe. High gas prices are being blamed for the decline in the production of ammonia, a key ingredient in fertilizer, by two chemicals giants. Svein Tore Holseter told CNN Business that Yara International’s ammonia production is only about one-third of its capacity.
According to a September survey by VDA, Germany’s automotive industry association, 85% of car makers view the country as an uncompetitive location because of high energy prices and insecure supply. Just 3% of companies said they plan to invest in the country, whereas 22% want to shift their investments abroad.
“Energy-intensive branches [of industry] will relocate as energy prices will structurally stay on higher levels. But, in total, we do not expect a full-blown deindustrialization of the economy,” Stefan Kooths, research director at the Kiehl Institute for the World Economy, told CNN Business.
Stopping open-pit coal mining in the farming village of Ltzerath, Germany: the EU hasn’t lost its green agenda
For the last few months, die-hard environmental activists have camped in the fields and occupied the trees in the small farming village of LtZERATH, hoping that like minded people from across the country would help stop the expansion of a nearby open-pit coal mine.
EU is in an uncomfortable position since it has positioned itself as a global climate leader, but some criticize Europe for only pursuing green agenda when it suits them. Germany and the EU have pushed back on that idea, stressing the U-turn was only temporary and that the bloc has significantly ramped up its investment into renewable energy.
“If there were 50,000 on the street, politicians would have to do something,” said Eckardt Heukamp, 58, the last farmer remaining in Lützerath, who put up some of the protesters in apartments on his property. Others built tree houses, pitched tents or moved into abandoned houses in the village.
But the hoped-for surge in protesters never materialized. The government said last week that RWE needed the coal beneath Ltzerath to make up for gas that was stopped flowing from Russia.
Coal is the world’s largest source of energy for electricity generation and the production of steel and cement. It is the biggest single contributor to the climate crisis, accounting for 40% of global greenhouse gas emissions from fossil fuel use.
The growth is mostly down to a rapid rise in the prices of natural gas and other fuels, which has forced some countries and regions to turn to coal as a cheaper alternative.
In the aftermath of the geopolitical clash with Russia, a sense of energy insecurity has pervaded Germany. Energy prices have skyrocketed. And because, in Germany, natural gas is used to generate electricity, fear of power outages has grown, too.
The IEA expects the EU’s coal use to drop 29% by 2025 compared to 2022, de Pous said. “This will be the result of action taken in as many as 19 EU countries to accelerate renewables,” he added.
The IEA reported that the level of coal power generation in China increased by 15% in August, which was higher than all but India and the United States.
Germans are making progress in reducing their gas consumption to meet the demands of the century-old renewable energy standard (Benard) euclidean conditions
The latest climate science shows that achieving net zero by the mid-century is necessary to keep temperatures from rising well above 1.5 degrees Celsius, compared with pre-industrial times. The world could face climate crisis impacts that take centuries to correct or could be irreversible.
When the government imposed curbs on travel and Germans started spending more time at home, there was a candle boom. When the nation opened back up, the industry expected the boom to end. The war in Ukraine started.
Germany has been working to do that. The United States is one of the places Germany is getting gas from. New infrastructure will increase the flow of gas from non-Russian sources.
Germany is trying to decrease its gas consumption and transform it into an energy economy. The nation is making progress. Our sources say Germans are very worried about the possibility of power shortages and high energy prices. They have responded by buying a lot of candles.
Stocking Up on Candles During Power Outages: Why Germans Don’t Want to Be There, Even if Your Phone is Charged
All public buildings are regulated. You don’t heat the floors anymore, lecture halls and so on,” says Moritz Kuhn, an economics professor at the University of Bonn. His university even handed out thermostats to professors to monitor the temperature of their offices. Kuhn gets to keep his office’s temperature at 19 degrees Celsius, or 66.2 degrees Fahrenheit — the maximum temperature that offices are now allowed to be heated.
But, Moll adds, there is still reason for Germans to be concerned. “Gas storage is the same as your phone battery,” he says. You can imagine the same thing if your phone is not charged while you’re on a trip. “You wouldn’t get excited about the fact that your phone battery is charged a hundred percent because you still know that it’s only gonna last you for a day.”
The German government says large-scale power outages are unlikely, but it’s still encouraging people to be prepared. This fall, the Federal Ministry for Economics and Climate Protection put out public service announcements about how people can conserve energy. The German Office of Civil Protection and Disaster Assistance has also issued guidance about how to prepare for a power outage — including by wearing lots of warm clothing, keeping flashlights and camping or outdoor lamps around, as well as plenty of batteries…and candles.
Germany’s utilities agency warned against overusing mobile heaters because of the potential for the power grid to be maxed out.
Moritz Kuhn, the economist from the University of Bonn, says his friends and family have been trying to buy firewood to heat their apartments, but it’s nowhere to be found. If you go to a store to buy things that can burn in your oven, you’re not going to find anything. He says that all it has is ridiculous prices.
Source: https://www.npr.org/sections/money/2022/12/20/1144258347/facing-an-energy-crisis-germans-stock-up-on-candles
Climate Change in Germany: When does the global warming meltdown come to an end? In Berlin, the last generation of climate activists protests is not concerned about what we can do
All this said, the economists we spoke to told us that Germany is successfully transitioning away from Russian energy. Wolff said the “meltdown” that people were worried about hasn’t happened.
About 46% of the country’s electricity has come from renewable sources this year, according to Germany’s environmental agency. Habeck believes he can double that in seven years.
BERLIN — It’s rush hour on a cold, snowy morning in Berlin. Commuter traffic has come to a standstill at a highway exit on the western edge of the city, as a dozen climate activists sit down on a pedestrian crossing in front of four lanes of cars and trucks.
The activists are members of a group called Letzte Generation. It will be too late for generations to stop the climate crisis if governments don’t act now, as argued by many scientists.
Johnsen was sticking her chapped, ungloved hands to the tarmac using industrial-strength superglue, which made her look cold.
“We can’t just look and see what the government is doing,” says Johnsen, a university student focused on environmental science. “They’re not taking overdue measures to protect future generation’s lives.”
Climate activists such as Johnsen are carrying out often disruptive protests on an almost daily basis. On some days, it is on a major city thoroughfare, while other days it is on the airport’s runway.
Johnsen is blinded by the headlights of the vehicles the activists are holding up while he sits with others at a recent protest.
Johnsen admits she’s intimidated, but she’s more concerned about what people will think when we fight for food or water in a few decades. I want to avoid this future. I’m not interested in this.
The driver, 48 year old Jenni Prller, said she is anxious about the future of the planet but this is not the place to discuss it. This is something else, I have nothing against protests. The people have a lot of anger! The Prller shouted. I’m trying to get my daughter an exam. She’s a law student and sitting the bar this morning.”
Theodor Schnarr is an activist who knows he’s unpopular. A recent poll shows that 70% of Germans disapprove of protesters disrupting their commute, but they think the government isn’t doing enough to tackle climate change.
Schnarr has been arrested and locked up twice for stopping traffic. He says he is aware of the science and warnings of the climate change.
Burning fossil fuels is speeding up climate change that’s already causing catastrophic consequences in the world, and scientists warn it will worsen as nations fail to make dramatic cuts to harmful gas emissions.
Climate Activists are Fuming: Why German Government is Frustrated About Clean Energy and Gaseous Use of fossil fuels
“If we would compare the situation to a war we wouldn’t go on as normal,” he says. “And we are in a desperate situation. We need to act like it and put in an emergency economy. This is one of the things that the German government should do.”
It was the Social Democratic chancellor who made the announcement that there would be an additional 200 billion euros to help cover rising energy prices. Fossil fuel money is being used to replace Russian gas.
Now Habeck — a member of the environmentalist Green Party — is the Cabinet minister responsible for finding these fossil fuels. He insists measures like his LNG deal with Qatar are short-term solutions.
But in a recent interview with public broadcaster ZDF, he argued for a clean energy path forward. He said that the future’s fuel is not coal, gas or oil. The task is to create a carbon neutral economy. Everyone is expected to help build a future free from fossil fuels.
Christoph Bals, policy director at the nonprofit Germanwatch, says it’s taking too long to implement the government’s ambitious legislation on renewable energy because of disagreements among the coalition’s three parties.
“Germany is way behind on renewables and embracing electric vehicles because Green Party policies are being blocked and delayed by the libertarian Free Democrat members of Cabinet,” he tells NPR.
The Free Democratic Party transport and justice ministers are among those calling for tougher punishment for climate activists occupying roads and airport runways.
Bals says while he understands the activists’ frustrations about increased use of gas and coal, those who violate the law face legal consequences. But, he says, the highest court has sided with environmentalists before.
“Germany’s constitutional court has already ruled that the previous government’s lack of action on climate change was unconstitutional,” Bals says, referring to a decision in 2021. The same court may see these protests as legitimate because they are meant to protect the rights of future generations.
German police have conducted a number of raids on the homes of Letzte Generation members and are investigating whether a recent protest delayed an ambulance from reaching a fatal collision.
Source: https://www.npr.org/2022/12/26/1144709223/climate-activists-are-fuming-as-germany-turns-to-coal-to-replace-russian-gas
“We don’t want to endanger ourselves,” Schroedinger says of a police officer delivering a knife to the road
Schnarr insists they always let the emergency services through: “We don’t want to endanger people. We don’t want to endanger ourselves,” he says. “This is the very opposite of what our government is doing.”
Back on the highway, a policeman uses a pastry brush dipped in cooking oil to dissolve the glue fixing Johnsen’s hands to the road. Another officer stands by with a bandage and handcuffs at the ready.