In the grip of the energy crisis

How has the Russian war impacted Germany’s renewable revolution?

By Sören Amelang, Clean Energy Wire

The energy crisis fueled by Russia’s war against Ukraine is dealing a heavy blow to Europe’s biggest economy Germany, due to its large dependence on Russian fossil fuels. Policymakers, businesses and households alike are struggling to cope with skyrocketing prices, which are fanning fears of irreparable damages to the country’s prized industries, economic hardships for its citizens, and social unrest. The long-term impact on the country’s landmark energy transition remains uncertain, as Germany redoubles efforts to roll out renewables, but also bets on liquefied natural gas (LNG), a temporary revival of coal plants and a limited runtime extension for its remaining nuclear plants to weather the storm. This article provides an overview of the state of play of Germany’s shift to climate neutrality, which is now dominated by its response to the crisis. It will be updated regularly. [UPDATE: Government earmarks 83 billion euros for gas and power price subsidies.]

As winter approaches, the German government in Berlin has launched massive energy relief packages for citizens and companies. (Photo by Norbert Braun on Unsplash)

What’s the energy crisis’ impact on the economy and households?

  • The energy crisis is set to push Germany into a recession, as rising energy prices put a damper on industrial production and inflation means citizens will buy less. Both the government and the country’s leading economic research institutes expect the economy to shrink in 2023. The government forecasts an inflation rate of 8 percent in 2022, and 7 percent in 2023.
  • Many German industrial companies have relied on cheap Russian pipeline gas, among them key producers of basic materials needed for many other products. These firms are particularly concerned about the energy crisis, as permanently higher gas prices threaten competitiveness and long-term survival.
  • The government has launched massive relief packages for citizens and companies (see below). Without these, many households would face additional energy costs running into thousands of euros per year, with retail gas prices multiplying for many citizens, and retail power prices also rising steeply.
  • Policymakers, consumer protection groups, and social care services have warned that the energy price hike could result in social hardships and even unrest if households are overburdened. But so far, protests have remained limited in scope and scale, and mainly limited to regions notorious for their rejection of government policies.
  • Most citizens blame the energy price hike on external factors such as the pandemic and the war on Ukraine, and generally approve of the government’s handling of the crisis, according to surveys. They also say that they are ready to contribute to energy savings. But rising prices have become the biggest concern for a vast majority of the population.

How has the government responded? 

How will the crisis affect Germany’s shift to climate neutrality? 

What’s the overall status of Germany’s energy transition?

This article, with regular updates, was first published by Clean Energy Wire. It is available under a “Creative Commons Attribution 4.0 International Licence (CC BY 4.0)” 

Headline photo: Karsten Würth on Unsplash

The opinions expressed in articles by outside contributors and published on the Beyond Nuclear International website, are their own, and do not necessarily reflect the views or positions of Beyond Nuclear. However, we try to offer a broad variety of viewpoints and perspectives as part of our mission “to educate and activate the public about the connections between nuclear power and nuclear weapons and the need to abandon both to safeguard our future”.

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