Germany has three months to save itself from a winter gas crisis
bloomberg.com
bloomberg.com
Imagine a scenario where China invades Taiwan. Besides losing access to about half the world's production of semi conductors, would we even be able to put sanctions on China without causing complete chaos here?
Russia has no allies. Even China is reluctant to take over what remains from Russian market abandoned by Western companies.
Local/Regional economies have existed since the dawn of agriculture.
It is reasonable to assume we will regress towards the mean at some point
https://www.thehindu.com/features/magazine/all-the-worlds-go...
Thank you for the article, very interesting read! China absorbed a lot of precious metals from Europe and elsewhere (silver more then gold as was the case with India historically). The British Empire used military force first in India and later in China, motivated in part by the precious metal deficit. And as consequent as the Raj was in the process, I mentioned China to add depth and nuance to the narrative and to illustrate that the precious metal outflow was by no means stopped by the British administration of India.
Except Ukraine isn't defending itself. US/NATO is defending Ukraine with billions of dollars in weapons and priceless intelligence.
They were stupid to shutdown their nuclear stations. That is for sure.
>"magine a scenario where China invades Taiwan. Besides losing access to about half the world's production of semi conductors, would we even be able to put sanctions on China without causing complete chaos here? "
The US and the rest of the Western world wanted cheap manufacturing. They got what they wanted. They've lifted whole bunch of Asian people out of poverty, made China a superpower, got some Western haves to get insanely rich and at the same time it allowed poor Joes Schmoes still enjoy a bit better life. It was good while it lasted. Now it seems that the love affair comes apart.
How much would germany kill to have a robust home solar installation right now? Even if you reduce dependence buy 20-30% from previous levels, that opens options for other sourcing.
And, uh, how about people bundle up and live in chillier houses? Christ they don't even really go under freezing that much. Sleep under thicker blankets.
There's other options: crash programs for insulation. wood stoves.
But I agree, there absolutely should be a minimum local sourcing for most products. We certainly do it for agriculture effectively with trade barriers and other regulation.
These ultra-extended supply lines are outgrowths of monopoly and cartel economics which dominate our markets rather than a robust amount of competition (which would enable options as well as alternate sourcing). We need a lot more competition and antitrust enforcement. The amount of political power handed to both state powers and the monopoly companies that are their partners is outlandish and dangerous.
Maybe not much killing, since solar requires consistent sunlight, which is not as prevalent in Germany.
Also a lot of landlords (corporate ones) have already announced that they will only supply heating up to 20C this winter. There's a lot of discussion about that going around i.e. people complaining about that.
But I think the difference is that China is more of a potential threat while Russia has long been a malicious actor. Germany should have known better and had several options they actively turned down (shuttering Nuclear plants for example).
The Tariffs from 2017 remain in place on some cheap goods from China.
The Chips Act passed last week.
If the proposed legislation for energy / climate passes, it will target subsidizing domestic solar panels + cars.
source: https://www.bloomberg.com/news/articles/2022-05-06/china-ord...
Edit: they being the TSMC
After the unexpected collapse of the Soviet Union the ex-KGB people knew that this was like the one deal that could make a fortune and give them access to power. Germany was be eager to keep up their end of the deal. What Germans didn't understand is that the people on the other side of the table were not the old communist politicians but corrupt gangsters.
I guess what I'm trying to say is that the entire West has only itself to blame in the way it underestimated Putin's strategic prowess and brutality. Influence is a two way road and all that.
I think that you are correct in seeing the similarities to the US-China relationship, but I don't think it's that simple. For one China isn't stupid. They will continue to do what they can to exert power in this relationship. But China is in an advantageous position right now, so they don't need to be invading anyone. What's more, the people in charge in China aren't gangsters, they're a political party with an actual ideology. That makes a big difference because these kinds of people usually aren't very eager to handle wars. What's more likely in the coming years are proxy wars and competing ambitious economic infrastructure development plans. But then again, all plans have a way of backfiring in one way or another, sooner or later so we will just have to wait and see.
China would stand to lose a lot of money in that situation, but our economy would be severely disrupted as well. Russia is showing that for a totalitarian regime, losing a lot of money may not necessarily be a complete show stopper. They could make that choice and decide it's worth it, if they don't have to worry about the polls and are able to shape the narrative their own population gets to see.
I think the fears you have assume that the people in power in China have this villainous desire for violence just for it's own sake. But we're talking about the communist party and career politicians here. China has a 10+ year head start with their belt and road initiative. This is where they have an upper hand - it would be stupid to switch to military confrontation.
You mean like the last time?
German–Soviet Trade and Credit Agreement https://en.wikipedia.org/wiki/German%E2%80%93Soviet_Credit_A...
"expectation of eventual territorial expansion to the Baltic countries, Finland and Poland, with the approval of either the Western powers or Germany" https://en.wikipedia.org/wiki/Stalin's_speech_of_19_August_1...
"In the event of a territorial and political rearrangement of the areas belonging to the Polish state the spheres of influence of Germany and the U.S.S.R. shall be bounded approximately by the line of the rivers Narew, Vistula, and San."
"With regard to Southeastern Europe attention is called by the Soviet side to its interest in Bessarabia (Moldova & Ukraine). The German side declares its complete political disinterestedness in these areas."
https://en.wikipedia.org/wiki/Germany%E2%80%93Soviet_Union_r...
It's just about the only action short of war that might cause a party to think twice, though, in practice it tends to harm the populations much more than it ever does the leaders (who in fact may find a boost from them).
It's a blunt and imprecise tool but it's what's in the tool drawer and there isn't much else in there other than war.
Former PM Schröder is nearly solely responsible for hooking Germany on cheap Russian oil. Just look at who he works for now — he’s effectively a Russian oligarch at this point and defended Russia’s latest invasion of Ukraine.
Instead we nodded slightly in disappointment and happily continued making ourselves dependent on Russian gas.
I don't mean to say that there's been nothing, along the lines of the 100% censorship that happened at /r/news the day of the 2016 Orlando mass shooter. There has been some. But there is far, far, far less. Just last moth we had
* a German minister stating that becoming dependent on Russian gas was a "grievous mistake", and that his country is begging for turbines from Canada "with a heavy heart"
* His government stating that entire industries might "collapse"
* Rationing of gas announced
* Local municipalities planning warm buildings that those without heat in their homes can visit during the winter
This is the greatest German catastrophe in 80 years. It is an existential threat to the German (and, thus, European) economy and nation. Any other topic half as serious would occupy far more of these subreddits' front pages. And it is entirely self-inflicted.
Detected the West German. Ever considered what happened in the East in the 1990s? 25 percent unemployment? Try that for a crisis, than we can talk again.
Um... Berlin wall?
The worst thing is that people seem not to realize the long-term effect. Everyone is talking about the winter.
Cheap energy is NOT coming back though. It is over. The window of opportunity for NS2 is also closing.
Germany has the choice to either do what Putin wants and survive or hold on to its values and lose its competitive advantage.
"On February 27th, the German arms industry gave Chancellor Olaf Scholz a 48 page list of military equipment that they could send to Ukraine. Scholz waited until today to forward it to the Ukrainians but his office only sent the Ukrainians half the document)"
"While Ukraine was offered Marder IFV, Boxer APC and even Leopard-2 MBT as well as Panzerhaubitze 2000 by German companies, it is not allowed to buy any of these systems in Germany"
1) At the end of February Germany's defense industry sends Scholz a long list of all available weapons.
2) Scholz doesn't share the list with Ukraine.
3) Scholz says that there are no more weapons left in Germany to give to Ukraine.
4) Germany's defense industry leaks the list to Ukraine's ambassador.
5) Scholz says that the weapons on the list don't work.
6) The defense industry denies this and leaks the list to the press.
7) Scholz states Ukrainians can't master the weapons in the available time.
8) German defense experts tell the German press that Ukrainians can master the weapons in 2-3 weeks.
9) Scholz says the weapons are needed by NATO and NATO must approve their transfer.
10) NATO officials and German generals deny this.
11) Scholz says no other NATO/EU ally is delivering heavy weapons to Ukraine.
12) The US, UK, Australia, Poland, Czechia, Slovakia, Romania, Turkey, Italy, Finland, Denmark, Romania, Netherlands, etc. publish the lists of heavy weapon they deliver to Ukraine.
13) Under pressure Scholz announces €2 billion for Ukraine's military.
14) German parliamentarians find out that it's really just €1 billion, which won't be available for another 2-3 months, and then Scholz can veto or delay indefinitely every item Ukraine wants to buy.
15) The US, France, Poland, Romania, Japan, the UK and Italy, plus the heads of EU and NATO spend an afternoon trying to talk sense into Scholz.
16) Scholz makes a statement and says Ukraine can have the €1 billion now and order whatever it wants from the list.
17) Ukraine's ambassador says that Scholz removed all the items Ukraine actually wants from the list before giving it to Ukraine and what remains on the list is just a fraction of the €1 billion.
18) Scholz claims that there is no ammunition anymore for the Leopard tanks and Marder infantry fighting vehicles.
19) Spain, Italy, Greece, Turkey, Egypt, the US, Japan, South Korea, Israel, Taiwan, Egypt respectively France are saying the produce these ammo types.
20) Scholz says countries delivering armored vehicles to Ukraine will be attacked by russia with nuclear weapons.
21) The US, UK, Australia, France, Poland, Spain, Italy, Romania, Slovakia, Czechia, Netherlands, Denmark all report they were not hit by nuclear weapons.
The United States only has 5 million households that use heating oil. Why haven't they retrofit the houses in Germany (assuming they are older)?
Of course, such quick acquisition and installation might be difficult or impossible, and purchasing and installing all those heat pumps won't be inexpensive, although it would save money over the long term. Perhaps the German government could provide financial grants or loans for those unable to afford it.
a.) there are not enough skilled workers that know how to deploy these. in fact it was just published in the news that due to boomers going in pension the workforce in this area already reduced over 10% in the last years and projected to sink even more. b.) most houses that are using Gas heating are not isolated well enough to make a switch to heat pumps financially viable.
If this were the national emergency that everyone claims it is, this problem could be fixed in weeks, if not months, by the government training people in the basics of getting heat pumps installed. It's not brain surgery, it doesn't need a decade of schooling.
> b.) most houses that are using Gas heating are not isolated well enough to make a switch to heat pumps financially viable.
That same argument could be used to say that most houses are not insulated well enough to make gas heating financially viable.
It's almost like that condescending attitude towards the trades is why so few young people are doing those apprenticeships anymore. That and the shit pay.
You're not going to solve that problem by making people feel warm and fuzzy about learning a trade that will only have that high level of demand for a few months, or a year, or even three years. You are going to solve that problem by treating it like the emergency that it is. But if you don't actually treat it like an emergency, it's not going to get solved.
The attitude I mean to project isn't one of condescension, it's one of 'just get the work done well enough to solve the short-term crisis.' When you're on a ship, and the ship's got a hole in the bottom, you're not going to get to shore if you start lamenting that you don't have a certified first-rate caulker on board. You may have to make do with having the third-rate one take a look at it.
My landlord replaced the heating oil boiler this (!) summer with a gas one. :( :(
ref: Nega-Watts
The decline hasn't much to do with nuclear, but instead with the conservative government shafting the previous infrastructure projects and subsidies for wind and pv. It was so clearly visible in the stats that it got named after the politian responsible ("Altmaier-Knick").
https://www.spektrum.de/news/erneuerbare-energien-der-energi...
Both retrofitting and coal gasification could probably be done in parallel.
I thought Germany was already really serious about renewables for the last 20 years, look where it brought them.
* wind energy deployment decreased massively in the last 3-4 years due to bureaucracy.
* Solar was always complicated, if you had it on the roof of your own house you would need to register a small business regardless and declare extra taxes every 3 month.
If you want to criticise them, criticise them for not going with nuclear, not for trying to build out alternatives to gas. That makes no sense.
Isolated houses wouldn’t be on the grid anyway right?
In this case "Isolation" in German is used both for insulation and isolation while they are separate words in English for the two.
> "Reliance on a single foreign supplier can leave a nation vulnerable to extortion and intimidation. That is why we congratulate European states, such as Poland, for leading the construction of a Baltic pipeline so that nations are not dependent on Russia to meet their energy needs. Germany will become totally dependent on Russian energy if it does not immediately change course,"
> "Here in the Western Hemisphere, we are committed to maintaining our independence from the encroachment of expansionist foreign powers."
So Germany will indeed learn the hard way, despite ignoring the repeated warnings.
Trump also yanked the rug out from under the TPP which effectively locked in our manufacturing relationship with China, so glass houses and all that.
https://www.rockagainstthetpp.org/
https://www.artistsagainsttpp.org/
https://act.eff.org/action/speak-out-against-the-trans-pacif...
https://www.huffpost.com/entry/why-im-against-the-tpp_b_6831...
https://progressive.org/latest/tpp-another-trade-scam/
https://www.cnn.com/2015/10/07/politics/hillary-clinton-oppo...
Agreed. Progressives are equally culpable. Though I never really heard many outlets reverse their opinions. I think people just largely forgot about the TPP.
> Then the "everything Trump does is wrong" crowd
To the contrary, I do not understand the crowd that shows up to a conversation about the time and insists on bringing their broken clock.
Even Biden said (in 2019) that he would not rejoin the TPP as it was initially put forward, and would insist that we renegotiate pieces of that.
> insists on bringing their broken clock.
I assume you're suggesting that the "everything Trump does is wrong" crowd doesn't exist? To the contrary, their influence is so great that even Thomas Friedman, a vocal opponent of Trump, felt it necessary to call them out:
"One of the hardest things to accept for all of us who want Donald Trump to be a one-term president is the fact that some things are true even if Donald Trump believes them!"
https://www.nytimes.com/2018/03/13/opinion/trump-trade-china...
> I assume you're suggesting that the "everything Trump does is wrong" crowd doesn't exist?
I'm not. But I also don't understand the driving need to give a specific politician credit for doing something normal. Someone quoted Trump's opinion, several of us pointed out that it's not particularly novel or unique, and now we are being lectured about how absolutes are wrong?
Are his words somehow divine that his opinions deserve to be discussed?
I'm not talking about Trump's opinion about Germany's dependence on Russia, which, I agree, is "not particularly novel or unique".
Why did you bring up the TPP, even though it's irrelevant to this conversation? It seems to me that it was purely as a criticism of Trump ("glass houses"), as if no positive statement about Trump could ever be allowed to pass without criticism.
And yet by 2016 when he took office it was known we were fucking with their internal politics too[1], using "totally not the CIA" organizations like the National Endowment for Democracy[2] and USAID[3].
This is not a new playbook, we have to realize every foreign government knows exactly what we're doing right? We can only pay people to look the other way for so long until a line is crossed. Whelp, apparently we discovered the line.
[0] https://www.bbc.com/news/world-europe-26079957
[1] https://en.wikipedia.org/wiki/Golos_(election_monitor)
[2] https://mronline.org/2022/03/08/national-endowment-for-democ...
[3] https://www.democracynow.org/2014/4/4/is_usaid_the_new_cia_a...
https://www.nytimes.com/1992/02/18/world/reagan-and-pope-rep...
>President Ronald Reagan signed a secret order in May 1982 that authorized an array of economic, diplomatic and covert measures to _destabilize the Government of Poland_ and begin to break the Soviet Union's dominance of Eastern Europe, Time magazine reported this week.
>The secret order, National Security Decision Directive 32, set in motion aid to the Solidarity movement, more vigorous promotion of human rights, economic pressure and diplomatic isolation of the Communist Government, the article said.
>The report in Time adds many new details, particularly the role of the Central Intelligence Agency and the Roman Catholic Church in opening networks across which telephones, fax machines, printing presses, photocopiers, computers and intelligence information moved to Solidarity.
Thanks to this I can buy bread, washing machine or a car without waiting in a queue, signing up on a list or waiting for a government grand. Meanwhile in a shithole russia: https://www.businessinsider.com/russia-tv-segment-family-who... https://www.pravda.com.ua/eng/news/2022/07/18/7358790/
So when Trump said he believed Putin in that instance, he was correct.
And by "fucking with their internal politics" you mean funded a non-profit, that was trying to expose rampant election fraud?
You are not going to persuade them.
Here is the delayed but inevitable result: https://news.ycombinator.com/item?id=32326857
The Nordstream 2 pipeline is pressurised and ready to go. Germany just has to switch it on.
Germans will put a sweater inside their houses and turn the thermostat down.
Yes, the industries will have a harder time, but for example, shifting generation from gas to even coal can save gas where it's needed
> the premier of the state of Saxony from the opposition conservatives. “If we aren’t careful, Germany could become deindustrialized,”
Oh that's cute. Where was this guy when this happened? https://www.cleanenergywire.org/news/closing-wind-turbine-pl... (mostly because of NIMBYism). I guess you reap what you sow
Just so the situation is clear, half of Germany energy is imported from Russia. Russia just turned off the taps, so you’re looking at a shortfall of 30-40% for winter (assuming it doesn’t restart).
What does this mean for people on the ground? Energy prices can easily go 10x (so a $300 bill becomes $3000/month). You’d have to drop the heating of your home by 20 degrees and you’ll still be seeing $1000/month bills.
Not to mention, this will force companies to shutdown. Energy costs are too high to maintain production. So you’ll see people losing their jobs AND having crazy bills.
This will impact everything across the board - food, goods, etc.
Not energy, but only gas.
> What does this mean for people on the ground? Energy prices can easily go 10x (so a $300 bill becomes $3000/month).
Almost no household pays $300 for heating here. We life in a large flat and paid 120€/month last year (including warming all water for the year).
> You’d have to drop the heating of your home by 20 degrees and you’ll still be seeing $1000/month bills.
If we drop heating altogether our flat cools down to 11°C during winter (found out the hard way because our heating system broke down during winter a few years ago), so reducing heating by 100% means a delta of 9°C. Reducing target temperature to 18°C instead of 20°C would save perhaps 25% of gas. I personally expect increases of about 1000€ for the whole heating season for our household (i.e. about triple costs).
The German depencence on gas is bad for multiple reasons, but your numbers are quite hyberbolic.
Germany gets ~50% of its gas from Russia, ~50% of its oil from Russia and ~50% of its coal from Russia.
Together ~85% of the energy of Germany comes from oil, coal and gas combined Nuclear was just phased out and I assume wind / solar made up for the differential. Wind often stops, particularly in winter. I’m not familiar on the particular turbines in Germany - but Canada mentions this: https://www.nrcan.gc.ca/energy/energy-sources-distribution/r...
So 30-45% of German energy comes directly from Russia. Potentially more during winter.
Regardless, you’re looking at it through the lens of your flat. That may not be representative. For instance, I’d your flat is next to other flats operating at 20C then I’d expect your flat to stay relatively warmer compared to the outside air. If everyone drops, it drops dramatically.
The average $300/month bill may have been a poor basis (let’s take your €120/month), but the magnitude change imo is more likely to 10x still. Energy prices change on the margin, there hasn’t been a crunch yet; but there will be - barring some agreement with Russia.
>Germans will put a sweater inside their houses and turn the thermostat down.
As others told you, this is completely wrong.
If you don't believe said state premier, how about the head of Germany's federation of unions <https://www.businessinsider.com/germany-faces-entire-industr...>:
>"Entire industries are in danger of collapsing permanently because of the gas bottlenecks: aluminum, glass, the chemical industry," Fahimi, the head of the German Federation of Trade Unions, told Bild am Sonntag. "Such a collapse would have massive consequences for the entire economy and jobs in Germany."
Russian gas is used in Germany for
* heating homes
* powering factories
* feedstock for those factories
They've been already been doing that to save money. We have friends there, they sleep at 18°C. I don't expect them to sleep at 16°C now.
That said, this is for the bed room. I wouldn't want to get up and sit at the breakfast table at 16C. That should stay comfy.
I've slept in 0F (about -18C) and all I felt was a little "chilly feeling" in the lung area but everything was totally fine. This was outside. Of course you make sure that everything else is warm, including especially the head, where you loose a lot of warmth actually. I bet it wasn't the fact that the air she was breathing that was 'cold' but that she got cold overall.
But regardless that’s not the question. Let’s say Russia just rolls a 20 and does far better than is rationally possible, taking Odessa and much of the east rapidly. How does that change the energy situation? Let’s say Russia captures all of Ukraine and gets its genocidal wishes. Does that change anything? Are they really gonna say “well the war is over so let’s resume gas purchases”?
I think no.
Napoleon's army occupied Moscow by late summer. They started their retreat in early fall, and got stuck in the mud. His army had been mostly destroyed before winter even started.
In the first world war, the German army fought through 3 winters in Russia before Russia surrendered.
In the second world war, the German army fought through 3 winters before they were defeated.
In the February 2022 Russian invasion in to Ukraine, the Russian army got stuck in the mud and was forced to abandon their siege of Kiev under heavy losses.
The Russian winter isn't necessarily any more pleasant for the Russians than for their enemies. I'm sure they made use of the climatic circumstances, but the weather didn't do the work for them. Napoleon and the nazis were both defeated by an opponent with a better grand strategy and logistics.
That's true, but the winter was famously the inflection point in WWII. It's no coincidence.
Why would Russia need to maintain leverage at that point? Wouldn't they be better off just selling the gas and taking the money?
>Russia decisively takes more of Ukraine... and somehow all sanctions are dropped?
If that happens, and the immediate conflict is resolved, what material reason is there for EU citizens to endure the cold?
If Russia lost decisively in Ukraine, I don't think they'll turn the gas back on to Europe unless there's a regime change in Russia. Putin will be thrashing around doing whatever he can to make Europe suffer for their helping Ukraine.
> If that happens, and the immediate conflict is resolved, what material reason is there for EU citizens to endure the cold?
But would the conflict be resolved in the case where Russia takes more of Ukraine? I don't see how it could be considered resolved at that point. Even if (especially if?) Russia were to take over all of Ukraine and install a puppet regime the west will continue to isolate Russia.
There's plenty of time for the situation to change drastically, but nobody should rely on that happening.
This seems like the only thing that could possibly happen in the next 3 months that would actually change the situation. But it also doesn't seem likely to happen within the next 3 months.
Do you mean a war where proper Germans die?
After Russia is finished with Europe we might have a far smaller economy, while they rebound with ease because what they sell can be sold anywhere at some price. Gas alone has done like a 20x in price. Even if Ukraine is a frozen conflict in 6 months, some of those billions will be used to attempt to re elect Trump, and if he wins, then Europe will be left alone (and helpless) to fight Russia, who seems to easily outnumber and outfight European nations. The fact is Russia is willing to do anything to take over Ukraine, while the West has “limits”. Those limits are the seeds of our downfall in Ukraine. Then if Trump will end Article 5 of NATO and then we might see chaos.
Russia is in a decent position to come out the winner of this, and the western media is dangerously underreporting this.
Edit: I do need to put /s tag on obvious stuff after all.
It's also completely absurd to think that Russia would have problems importing anything they can't make domestically given that India and China are backing them.
What sanctions do is prevent countries from building effective armies. See blocking Russia from getting enough good steel, which means they can't shoot for as long or as well. See not getting modern microchips, which means they cannot make drones or missiles.
The sanctions must remain until Russia is much different. Otherwise this will just become another episode in the long war series.
I'd like to know how these sanctions are working for us.
Short term: not too good.Long term: great.
Russia is a mafia state where oligarchy funded by resource exports uses most of money for lining their pockets but they spend rest on keeping up appearances that Russia is modern developed country. This setup allowed them to weaponize their foreign trade and use it against Europe on many occasions. Oligarchs don't care about changes of prices of goods on domestic market as long as they get money from resources while at same time European companies functioning on free market depend on trade to Russia for part of their income. So if Russian govt. wanted to pressure some government in Europe, they would just randomly announce that they found african pig virus in imported meat, and they are ceasing all meat imports from the country immediately. Or they would announce that apples are sick and do the same. Or they would announce that in October that they will have to reduce gas exports to given country because they have unspecific technical issue in transit system that they are currently working on resolving.
This is why limiting economic ties to Russia is so important for Europe. Its a shock therapy that will let us bullet-proof our economies from Russian political influence while at same time Russian corrupted economy will not have it this easy to switch their tech industries (namely heavy industries and military production) away from dependence on European imports. And "they'll just switch to Asia" excuse will not work here because they are cut from first-league Asian exports because those happen to also be democracies that are part of states sanctioning them. They are left with China, Turkey and India who don't know how to produce fifth-generation radar systems for fighters, fifth generation tank armors and gun barrels or fifth generation tracking systems for their munitions.
Great twitter thread explaining the situation: https://twitter.com/kamilkazani/status/1501360272442896388