Germany revamps 1975 oil crisis law in face of new energy supply threats

The newish German government is working towards a revamp of a 1970s oil shock law as worries over Russia shutting off the gas mount. [EPA-EFE/HENNING SCHACHT / POOL]

The German government has decided to revamp its energy security act from 1975. The update will allow the executive to expropriate operators of critical infrastructure while authorities will be given “far-reaching options for action to manage crises.”

The update to Germany’s 1970s oil shock bill is being fast-tracked as a deadline set by Russia approaches when the country will only accept roubles for its gas deliveries.

“Russia’s war of aggression on Ukraine, which violates international law, has led to a tense energy situation. Prices are high, uncertainty is great, risks are present. We must therefore prepare ourselves for the situation to come to a head,” explained vice-chancellor Robert Habeck.

“Therefore, with the amendment to the energy security act, we are once again significantly sharpening our instruments and bringing them up to date,” he added.

With gas stores 33% full, being prepared for the worst-case scenario is at the heart of the historic revamp.

“This will enable us to strengthen crisis preparedness and act quickly and comprehensively. It is a matter of doing everything possible to maintain basic supplies,” the vice-chancellor said.

Already, Habeck has called on German citizens to conserve energy. “I ask everyone to make a contribution to saving energy right now,” he told Funke Media Group on 14 April.

Germans asked to conserve energy to reduce reliance on Russia

Germans should start saving energy to become more independent from Russian fossil fuels, Economic Minister Robert Habeck said, as Europe’s biggest country looks for ways to cut reliance on Moscow.

The update to the rather ancient law, which will now be rushed through the German legislative, will implement several major changes.

First, the government will create a digital platform to enact crisis measures more swiftly. In the gas sector, traders and industrial consumers will have to register themselves and supply data on their gas purchases and consumption. The goal is to allow authorities to quickly shut down companies during a gas shortage, the ministry for economy and climate action said.

Secondly, Berlin will implement regulations to strengthen the EU solidarity mechanism. Based on the EU’s 2017 security of gas supply regulation, EU states must come to each other’s aid in case of a gas shortage. “The obligation under the security of supply Regulation to supply gas to EU Member States cannot be fulfilled without these measures,” the ministry said in a statement.

Thirdly, the law will allow the government to implement “extraordinary measures of crisis prevention,” which can be applied before an emergency takes place at all. The goal of these measures is to prevent any threat to energy supplies, the ministry said.

These could include putting critical infrastructure under state stewardship, as well as ordering price adjustments.

Germany, has historically been reluctant to nationalise private companies. As a first step, Berlin had temporarily put the German subsidiary of Russian state-owned company Gazprom under government stewardship, but continued to oppose the idea of expropriation.

The government is now considering “expropriation as an ultima ratio” in the case that operators of critical infrastructure “can no longer adequately meet” their obligations. The decision comes as the country’s largest gas storage site in Rehden, which is owned by Gazprom, continues to be at very low storage levels.

The measure echoes proposals tabled by the European Commission. In March, the EU executive tabled a new mandatory certification scheme for owners of gas storage infrastructure, warning that those posing a security risk to Europe will have to give up ownership or cede control of facilities.

EU tables plan to certify gas storage operators, threatening Russia’s Gazprom

A new mandatory certification scheme for owners of gas storage infrastructure was tabled by the European Commission on Wednesday (23 March), warning that those posing a security risk to Europe will have to give up ownership or cede control of facilities.

Furthermore, the German government will put measures in place allowing utilities to rapidly adjust gas prices in case of crisis. Thereby, the government hopes to avoid cascading effects and uphold supply chains and market mechanisms as long as possible.

Additionally, the energy market act will be amended in order to allow the government to order companies to stop using so-called “critical components” should public order or national security “be negatively affected”. This could occur for example if the component’s producer is under the control of a non-EU government.

Lastly, decommissioning gas storage facilities now requires notification to the federal network agency in order to avoid gas storage not being available without the agency being aware.

[Edited by Frédéric Simon]

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