"High price island in Europe" - Germany extremely vulnerable when it comes to energy

Created: 06/28/2022, 13:21

By: Lisa Mayerhofer

A current study shows: In an international comparison, Germany is particularly vulnerable to supply bottlenecks and rising energy prices.

Mannheim – Germany is threatened by an energy crisis.

Only a week ago, the federal government declared the alarm level in the gas emergency plan due to falling Russian gas supplies.

Germany is facing a "hard winter," said Economics Minister Robert Habeck (Greens).

A current study now shows that Germany's energy supply is particularly vulnerable in an international comparison - both to rising prices and to supply bottlenecks.

In the analysis published on Tuesday, the Mannheim-based economic research institute ZEW warns that Germany, together with the Netherlands, will become a "high-price island" when it comes to electricity supply.

As far as susceptibility to missing gas deliveries is concerned, Germany is therefore particularly vulnerable, together with Italy.

Gas crisis: Prices are rising in Germany – but not in many other countries

According to the ZEW, both factors endanger competitiveness and make Germany unattractive for industrial sectors with high energy consumption.

The client was the Foundation for Family Businesses.

For the study, the ZEW looked at the energy supply of 21 industrialized countries from the point of view of how much the national economies would suffer from price increases and supply bottlenecks.

The economists compared 16 EU countries, as well as the USA, Japan, Canada, Great Britain and Switzerland.

According to this, the security of supply of the three major non-European economies is not endangered at all because of the Ukraine war.

The price increases there have so far been "extremely moderate or non-existent," according to the analysis.

In Europe, too, the vast majority of countries are less vulnerable to a lack of energy supplies than Germany, which is particularly dependent on Russian gas.

"The price effects of the energy crisis for electricity and gas are largely limited to European locations," explained study author Friedrich Heinemann.

There are striking differences within Europe.

"Germany, together with the Netherlands, is increasingly becoming a high-price island." According to the ZEW analysis, electricity prices in France and Switzerland, for example, have not risen significantly.

Gas crisis in Germany: "Overseas competitors have no problem"

In the event of gas rationing, the metalworking, chemical and paper sectors would suffer the most.

A study commissioned by the Bavarian Business Association (vbw) comes to a similar conclusion.

According to the ZEW, significant damage in other sectors could not be ruled out due to the lack of preliminary products.

"Overseas competitors have no problem," said Rainer Kirchdörfer, Chairman of the Foundation.

"And the competitors in Europe can switch more quickly given the lower consumption levels." Both the Foundation for Family Businesses and the ZEW appealed to the federal government: "The economic and energy policy in this country must therefore find answers to the question of how Germany's competitiveness for energy-intensive companies can be maintained can be.”