Bundestag approves provisional coal-fired power generation as gas substitute

Fri 8th Jul, 2022

Image by Bruno /GermanyBecause of the gas crisis, the German parliament has cleared the way for more coal-fired power plants to be used to generate electricity. The aim of this measure is to save and store gas. At the same time, the members of parliament decided late on Thursday evening to facilitate state aid for ailing energy companies such as Uniper. As an option, a pay-as-you-go system may also be created so that price jumps in gas for energy suppliers can be passed on to customers more evenly - replacing rules that have been possible up to now. However, the German government wants to avoid having to use this instrument.

The amendments to the law passed by the Bundestag are still to go through the Bundesrat on Friday. They are a reaction to the severe curtailment of Russian gas supplies through the Nord Stream 1 pipeline. In order to save gas, less gas is now to be used to produce electricity. Instead, coal-fired power plants that are currently only available to a limited extent, are about to be decommissioned or are in reserve are to be used.

The Federal Ministry of Economics and Technology had already announced that it would prepare the necessary ministerial decree in parallel to set the so-called gas replacement reserve in motion. "We will call up the gas replacement reserve as soon as the law has come into force," Economics Minister Robert Habeck (Greens) had announced.

"That means - you have to be that honest - more coal-fired power plants for a transitional period. That is bitter, but it is sheer necessity in this situation to reduce gas consumption. We must and we will do everything we can to store as much gas as possible in the summer and fall," Habeck said. The gas storage facilities must be full by winter, he added. That is the top priority, he added.

The curbing of Russian gas supplies through Nord Stream 1 has left Germany's largest importer of Russian natural gas, Uniper, in turmoil and calling for state aid. Negotiations are currently underway with the German government. The legal changes are intended to make it easier for the federal government to get involved with energy suppliers. The problems on the gas market could worsen. Annual maintenance work on Nord Stream 1, which usually lasts ten days, begins on July 11. The big concern is that Russia will not turn on the gas tap again after the maintenance.

German Chancellor Olaf Scholz does not currently see Germany in a gas shortage situation, as he said on the ZDF program "Maybrit Illner" on Thursday evening. He also said it was "not a foregone conclusion" that it would come to that. "It would just be completely irresponsible not to consider it as a possibility and prepare for it," the SPD politician stressed. In the event that it does occur, he said, people are preparing for prioritized energy distribution, for example.

The Federal Association of German Industry (BDI) met with support for the Bundestag's decisions. The decision to temporarily take coal-fired power plants out of reserve came late, but was the right one, BDI President Siegfried Russwurm told the German Press Agency. Government support for energy suppliers was also right, he added. "The German government has recognized the seriousness of the gas supply situation," Russwurm praised.

The German Association of the Automotive Industry (VDA) also spoke of important measures: "The triad of direct aid for distressed gas suppliers, preventive measures to reduce gas consumption and additional crisis management instruments is the right approach," explained VDA President Hildegard Müller.

The Bundestag rejected an amendment proposed by the CDU/CSU parliamentary group that aimed to extend the operating lives of nuclear power plants. The CDU and CSU had proposed that the federal government should be able to allow the three remaining German nuclear power plants to continue operating by statutory order in addition to coal-fired power plants. The FDP had also recently advocated this - but the Free Democrats were unable to prevail against the SPD and the Greens in the coalition.

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