German industry may not fully recover to levels seen before the energy crisis due to high prices for imported liquefied natural gas (LNG), according to Markus Krebber, chief executive of German energy company RWE.
“Gas prices in continental Europe, and especially in Germany, are structurally higher now because we are ultimately dependent on LNG imports,” he told the Financial Times. – German industry is at a disadvantage.”
Gas prices in Europe have fallen about 90 percent from peak levels seen in 2022, but remain about two-thirds higher than in 2019, the FT wrote, citing data from Argus.
Krebber criticized Angela Merkel’s government’s decision in 2011 to abandon nuclear power without finding an alternative to Russian gas.
“When you know exactly what you want to give up, you should immediately start thinking about introducing new technologies,” he said.
Analysts are pessimistic about the prospects for Germany’s economy, Europe’s largest. According to the assessment of the five leading research institutes of Germany, the country’s GDP in 2024 will grow by only 0.1% due to the decline in exports and weak domestic demand. In 2023, the German economy contracted by 0.3%.
According to S&P Global Commodity Insights, demand for natural gas in the industrial sector in Europe fell by 24% in 2023 compared to 2019. The company’s experts believe that about 6-10% of European demand will be lost irretrievably due to demand destruction.
At the same time, the U.S. has a consistent and comprehensive policy to encourage the return of production capacity to the country, Krebber said. “Europe has the same intentions, but so far there are no proper measures in place,” he added.
A survey by the German Chamber of Commerce and Industry last September showed that 43% of large industrial companies plan to move their business outside Germany, with the US a priority. Last year, German companies announced investments of $15.7 billion in projects in the U.S., compared with $8.2 billion a year earlier, according to fDi Markets.
