“We have to reckon with the fact that it will take longer for prices to normalize,” says the manager.
(Photo: Marc-Steffen Unger for Handelsblatt)
Berlin RWE boss Markus Krebber is concerned about the persistently tense situation on the energy markets. When asked about a possible gas or electricity shortage in Germany, the manager said on Monday at the Handelsblatt energy summit in Berlin: “I’m afraid that the high industrial prices will mean that we are gradually de-industrializing and hardly anyone will notice.”
A worsening reason for the currently tense situation on the energy markets is the conflict between the West and Russia over Ukraine. According to Krebber, the gas supply in Germany is not in acute danger in view of the Ukraine conflict. “I’m not afraid that the gas supply will collapse across the board,” he said. The concern that the heaters will remain cold tomorrow is not justified.
It was announced over the weekend that the US government is preparing contingency plans for gas supplies to Europe in the event that Russian President Vladimir Putin cuts off gas supplies. According to the Reuters news agency, the US State Department has started talks with energy companies.
For the European Union, a Russian gas supply freeze would be an unprecedented challenge. It currently obtains around a third of its gas requirements from Russia. In Germany, more than half of the natural gas comes from Russia.
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However, Krebber made it clear: “We have a mutual dependency with Russia. The gas from Russia cannot be replaced in the short term, but Russia also needs the foreign exchange from the sale of raw materials.” This mutual dependence has opened up dialogue again in the past. Krebber did not want to comment on whether talks between the US State Department and RWE are currently taking place.
When asked whether gas would have to come to Germany via Nord Stream 2 in the future or better via its own LNG terminal in the form of liquid gas from the USA, Krebber said: “I think the infrastructure is sufficient in terms of the pure amount of gas . It’s more a matter of diversification.”
“We will not become CO2 neutral overnight, there will be intermediate steps”
The Ukraine crisis is only the most recent escalation of an already extremely tense situation on the energy markets. The prices for electricity and gas have reached record levels in recent months – to the chagrin of consumers and industry. For example, one megawatt hour (MWh) of electricity cost an average of 48 euros on the futures market in January 2019. At the end of December, the price of electricity on the exchange jumped to an all-time high of EUR 325 per MWh.
Even if prices have recently fallen again, the RWE boss does not believe in an imminent, lasting improvement. “We have to expect that it will take longer for prices to normalize,” he said. “I also believe that the geopolitical situation is helping to keep the uncertainty in the markets higher.”
However, the problem should not be solved in terms of energy economy. Because the political incentive of high prices for fossil fuels ensures that investments are made in new technologies. You have to stay with the high CO2 prices and thus with the high energy prices. It may need a socio-political cushioning.
More on the subject of energy supply
At the same time, Krebber called for industrial policy support. Significantly reduced industrial electricity prices are necessary for the transition. “As long as we have shortages and green products from Germany compete with international products, we need support for the industry.” However, this must be limited in time.
RWE plays a central role in the German transition to renewable energies. The group wants to invest 50 billion euros in the coming years. “We’ve had exit debates for years – now it’s about switching on,” said Krebber. It is also about preserving jobs and prosperity in Germany. He therefore welcomes the acceleration of the energy transition via the emergency program that Economics Minister Robert Habeck (Greens) presented last week.
However, a certain pragmatism is also important in the transition phase. “We will not become CO2-neutral overnight, there will be intermediate steps,” says Krebber. Regarding the discussion about the fact that the EU Commission wants to classify gas and nuclear power as sustainable in its taxonomy, he said: “You can have two perspectives on the topic. You can lead the discussion ideologically, or they say we have a pragmatic problem to solve, namely reducing CO2 emissions.” Everything that could contribute to this is initially positive.
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