Only a Breather for German Industry: German Politicians, Cutting off Inexpensive Russian Energy Made a Huge Mistake With No Pathway for Return

    Economic Impact: The abrupt shift resulted in significantly higher energy costs for German industry and households, as the country had to secure more expensive liquefied natural gas (LNG) from global markets.

 

 Industry leaders have suggested this has caused "significant structural demand destruction in the energy-intensive industries" which could be permanent.

 

Diversification and Infrastructure: Germany has rapidly built LNG import terminals and secured new supply partnerships (e.g., with Norway, the US, Qatar) to replace Russian volumes, successfully avoiding a feared catastrophic gas shortage.

 

Potential Future Shifts: Despite the official stance, some voices within German industry, particularly in the east, have expressed openness to a return of Russian gas volumes. However, the political will for a formal return is currently absent given the ongoing geopolitical context.

 

Society and industry are switching to an AI economy. AI needs a stable cheap energy source that in Germany could be provided only by the Russians. German renewables don’t provide stable and cheap electricity for AI yet. Hydrogen is a pipe dream, slowly disappearing in the clouds. It is much more expensive than even the liquid natural gas from overseas. This is why tall tales about “the burgeoning AI sector” in the EU are a bad joke. Deindustrialization of Germany and by default, the European Union, is a fact of life.  The EU is stuck in the mud of outrageous politics.

 

“The temporary electricity price discount alleviates the problems in the short term, but does not address their root cause.

 

Just in time for the "Steel Summit" on Thursday, Federal Minister of Economics Katherina Reiche (CDU) announced the completion of the plan: the subsidized industrial electricity price will be introduced at the beginning of 2026. Energy-intensive companies can thus breathe a sigh of relief to some extent.

 

They will receive a state subsidy for half of their electricity consumption.

 

However, no one should be under the illusion that this subsidy will make the industry competitive again. The subsidized industrial electricity price dampens the high energy costs in Germany somewhat, but does not address their cause, a misguided energy policy.

 

If things go well, the measure will prevent the loss of some jobs. However, the support, which is limited to three years, is not an invitation to long-term investment.

 

The protective measures against steel imports from China planned at the EU level will also only provide the industry with a brief respite at best. Protectionism does not help against unfavorable economic conditions; only courageous reform policies will.”