German industrial and public works associations on Monday responded positively to plans announced by the Economy Ministry to compensate for a reduction in gas supply from Russia.

On Sunday, the Economy Ministry said Germany would need to use more coal for electricity production and increase the amount of gas in storage.

Economy Minister Robert Habeck also proposed putting a cap on domestic heating and setting up a gas auction model this summer to incentivize the saving of gas by industry.

Under the scheme, industrial customers who can do without gas will reduce their consumption in exchange for financial compensation.

Siegfried Russwurm, president of the Federation of German Industries (BDI), Germany's main business lobby group, told DPA news agency "every kilowatt-hour counts."

"We need to reduce the consumption of gas as much as possible," he said.

Karl Haeusgen, president of the German mechanical engineering association (VDMA), said the association supports Habeck's plan to reduce gas consumption in industry with auctions.

"This steers the reduction to where the least damage is done," Haeusgen said in a statement. "We are moving toward a very difficult situation," he added.

Coal climate goals vs. energy demand

However, to reduce the use of gas for electricity, Germany must turn on more coal-fired power plants, which works against plans by the coalition government to make German energy production coal-free by 2030.

On Monday, the Economy Ministry said Germany still aims to close its coal power plants by the end of the decade. 

"The 2030 coal exit date is not in doubt at all. It is more important than ever that it is realized in 2030," Economy Ministry spokesman Stephan Gabriel Haufe told a regular press conference.

Habeck, from the environmentally friendly Greens, said Sunday that using more coal was "bitter" but "simply necessary in this situation to lower gas usage."

Industry lobby leader Russwurm said that securing energy supply in the face of Russian cuts means putting climate goals on ice.

"At the moment, we are talking about short-term bridging measures to secure energy supply, not about a coal phase-out date of 2038 or 2030," he said, adding that more must be done by local politicians to speed up approval for building wind and solar facilities.

The VDMA's Haeusgen also said that coal-fired power would help in the short term, but that "climate transformation goals must not be lost sight of, "including expanding renewable energy capacity."

Kerstin Andreae, chairwoman of BDEW, the association for the energy and water industry, told public broadcaster ARD that dormant coal power plants could be reactivated in a relatively short timeframe.

Heating homes in winter

Along with providing electricity, natural gas is also a primary source of heat for German homes in winter.

"The priority must be to fill gas storage for the coming winter," Klaus Müller, head of Germany's Federal Network Agency, told the Tagesspiegel newspaper. Müller added that turning to coal was not an easy decision politically.

"In order to reduce gas consumption in power generation, however, it's necessary," he said.

Habeck told public broadcaster ZDF that he was confident supplies could be secured by winter.

"It's crucial that the gas storage facilities are full going into the winter, which means that they are at 90%," Habeck said. Germany's gas storage facilities are currently 57% full.

Conservatives say Habeck's plan comes 'too late'

Opposition conservative politician Jens Spahn told broadcaster ARD on Monday that Habeck was taking a step in the right direction, however "he is taking it too late."

"If we had started running more coal plants, fewer gas plants back in March, maybe the storage facilities would be 10% fuller by now," Spahn said.

And the managing director of the German Association of Small- and Medium-Sized Businesses (BVMW), warned that Habeck's gas auction proposal could spell trouble.

The BVMV's Markus Jerger told the Redaktionsnetzwerk Deutschland newspaper group, that small and medium-sized businesses would find it hard to compete with larger companies on how much supply they can auction off.

Jerger said small and medium-sized business are increasingly worried about "being caught between the warm living rooms of private consumers and the raw material needs of large-scale industry."

wmr/kb (dpa, AFP)