Dusseldorf The head of the energy supplier Eon traveled through Poland, Slovakia and Romania for several days shortly before Easter. There he visited locations of the Essen-based company and, above all, projects that his local employees have set up for refugees from the Ukraine since the outbreak of war. The interview will therefore take place digitally.
Quite atypically for the graduate chemical engineer, he doesn’t sit in front of the camera in a suit and tie, but in red dungarees and work shoes. It is the mandatory safety clothing of the Eon subsidiary Delgaz in Romania that Birnbaum will visit after the meeting. “It’s different when you’re ten kilometers away than when you’re 1,000 kilometers away,” says the 55-year-old, visibly affected by the war in neighboring Ukraine.
Nevertheless, he continues to speak out against an embargo on Russian gas supplies. But not only because of the consequences for Germany: “If we believe that we can ensure the German supply without taking care of the other countries together, then the EU will tear apart,” said the Eon boss.
Many studies dealing with the possible consequences of a gas boycott have only focused on Germany, “Slovakia is completely dependent on Russian gas, and countries like the Czech Republic and Austria now get most of their natural gas from Russia”. This topic should not only be considered nationally, after all it is a question of a European gas shortage. That is why emergency plans coordinated at European level are also needed.
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Birnbaum also announced rising prices for electricity customers. The switch from pipeline to LNG gas increases gas prices, and coal electricity is also becoming more expensive due to the CO2 price. “We’re leveling off at a higher level for the time being,” and you have to pass these prices on to your own customers.
Read the entire interview here:
Mr. Birnbaum, you were just in Romania, near the Ukrainian border. What did you do there?
I visited the Eon companies that have been helping refugees from Ukraine since the outbreak of war. I’ve been to Poland, Slovakia and Romania to talk to local people. That’s something different when you’re ten kilometers off than when you’re 1,000 kilometers away.
Russian President Vladimir Putin threatened on Thursday that he could easily divert his energy supplies to other countries. How secure is our energy supply these days?
Unsatisfactory. We have learned over the past few weeks that strategic dependencies can be problematic. And we learned the hard way that as Europe, but especially as Germany, we didn’t have enough security of supply on our radar.
There is already an embargo on hard coal, an embargo on oil and a gas boycott are under discussion. As the war escalates, should the EU stop using Russian gas immediately?
I think that’s wrong. Just because I was traveling in Europe. It’s not that only Germany would be hit hard by such a step, Europe would have a massive problem. For example, Slovakia is completely dependent on Russian gas, and countries like the Czech Republic and Austria now get most of their natural gas from Russia. In many other EU countries it is at least a significant proportion. If we believe that we can ensure Germany’s supplies without taking care of the other countries together, then the EU will tear apart. We must not treat this as a national issue.
Economists are divided over the impact of a gas boycott. Some talk about a slump in growth of up to five percent and more, others of just two percent…
Some believe the industry can easily cut 20 to 30 percent of its gas needs without significant damage. That may be the case, but I’d rather know for sure before I risk leading Europe into a severe economic crisis in these times. Studies that claim, without any solid justification, that all of this is manageable should not be the basis for a decision for anyone in charge. That’s why I still think it’s right and responsible that the federal government rejects a gas embargo.
But even if the EU continues to oppose a gas boycott, the order can also come from Moscow – how is Eon preparing for this scenario?
We are preparing for this in every country together with the responsible authorities. However, the emergency plans of the European countries must also be coordinated. All of our contingency plans are national, but we are talking about a European gas shortage. There is still a lot to do here.
You are also preparing your major customers to switch off. How scared are companies?
At the moment I would rather say that there is a lot of uncertainty. The companies don’t even know what’s coming, for how long and for whom. If you don’t know what’s coming, you obviously have a problem. That’s why we should quickly clarify this.
What would a direct gas boycott mean for your private customers? Many citizens are afraid that their heating will be turned off next winter.
According to the current legal situation, private customers would be last in the shutdown sequence.
Energy companies have been under particularly high pressure since the outbreak of war. Shell, BP and many others have subsequently exited their Russian business. Eon has a 15 percent stake in the Nord Stream 1 pipeline. So far, stick with it. Why?
We even explicitly adhere to it. This is the pipeline through which most of the natural gas consumed in Europe and Germany still comes. Who is served by relinquishing our rights to it now? All that would happen then is that the Russian majority owner would have sole control of that pipeline. And that doesn’t do anyone any good.
>> Read here: In this way, the EU could compensate for a stop in Russian gas supplies
Earlier, before Uniper’s spin-off, Eon also pushed ahead with the construction of Nord Stream 2. Her predecessor Johannes Teyssen was often in front of the camera with Angela Merkel and Putin. Didn’t Eon, like Uniper and many others, help drive dependency on Russia?
Today we are dependent because Germany has taken every alternative. This was not a one-sided action. We started importing gas from Russia during the Cold War in the 1970s. Today one wonders how one could do that. We were only able to do that because we had many alternatives, meaning we couldn’t be blackmailed. However, these alternatives have gradually been switched off.
What alternatives do you mean?
Ten years ago, the European Union was not willing to put a single euro into alternative gas pipeline projects. Anyone who wanted to build an LNG terminal would probably not have received a permit, let alone financial support.
“There is no future for nuclear energy in Germany”
Preparations are now in full swing to become less dependent on Russian gas. The federal government is also considering leaving coal-fired power plants on the grid for longer than planned, Germany’s own LNG terminals and more wind and solar parks. Is that enough?
We will need everything we can get. We will also have to set up energy saving programs. There is no easy liberation. We need a combination of many things, and that includes making uncomfortable decisions, such as the question of longer runtimes for coal-fired power plants.
What about nuclear power? So far you have ruled out continued operation of the Isar 2 nuclear power plant. The Bavarian Prime Minister Markus Söder wants to keep the power plant running. France and Great Britain even want to build new nuclear power plants.
We have seriously discussed this with the federal government, and yes, it would be technically possible. But the potential energy yield is ultimately too low. There is no future for nuclear energy in Germany.
When do you think Germany can be independent of Russian energy imports?
three years It’s nice if we’re faster, but it’s definitely not a question of three months.
Meanwhile, electricity prices for consumers continue to rise. Eon has also announced a price increase for its customers. How expensive will our electricity still be – also with a view to the energy transition?
With regard to the energy transition, there is hope that electricity will eventually become cheaper with more solar and wind. However, we do not see this relief in the short term. We’re leveling off at a higher level. The switch from pipeline gas to LNG makes the gas more expensive, coal is made more expensive above all by the CO2 price – and the price is set either by coal or gas power plants. And yes, as bitter as that is, we also have to pass the rising prices on to our customers.
How long can customers still handle this in view of the inflation in many other products at the same time?
This war is a war that will make everyone worse off. The Ukrainians in particular are worse off, but so are the Russians and the Europeans. In this situation, everyone loses.
“Consumer prices cannot simply be capped”
France caps its electricity prices so that citizens are not overburdened. Would such a model also be conceivable in Germany?
France capped the prices of its state electricity supplier and then put money back into this very company. Capping prices is not a solution. If the baker has to sell rolls at a capped price, but flour prices have increased tenfold, then you won’t be able to buy any more rolls the day after tomorrow because the baker is broke. And that’s how it is with us as an energy supplier. Consumer prices cannot simply be capped. As a provider, we simply cannot bear the sums involved.
What do you think of the new federal government so far and, of course, especially of Economics Minister Robert Habeck, who has initiated a number of things in recent weeks that would have been unthinkable a few months ago?
In my view, the federal government is acting prudently and prudently. In the energy sector, a lot was initiated during this severe crisis, which was the right thing to do.
This also includes a relief package for energy companies, among others. VNG, Uniper and Leag have already had to take advantage of loan assistance. Is that enough?
It is important in order to avoid chain reactions that can also arise when companies get into a crisis through no fault of their own. Whether this is sufficient remains to be seen. In any case, it makes sense to prepare well for such a case.
Mr. Habeck also presented the Easter package to speed up the energy transition. There was some harsh criticism from the renewables sector because they had expected much more.
The direction is right, but one can certainly agree with the criticism. We want the heat transition, we want electromobility and many more renewables – the grid must be strengthened for this. The grid – and in particular the distribution grid – is the backbone of the energy transition. This is where the renewables are connected. However, the topic has been postponed to 2023 for the time being. If we expand renewables but don’t have the infrastructure, that’s of little use to us. That’s why I don’t think it’s consistent enough here. That’s definitely not enough.
Mr. Birnbaum, thank you very much for the interview.
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