BERLIN, September 8. /TASS/. German companies are forced to purchase natural gas at higher prices as a result of the country’s and the European Union’s energy policies, Handelsblatt reported, citing a study by the consulting firm BCG.
According to the report, Europe leads the world in the share of short-term contracts for gas imports. In the region, such contracts account for 28% of imports, compared with 17% in India, 12% in China, and none at all in Japan, where all supplies are secured through long-term agreements. Long-term contracts enable companies to negotiate lower prices, providing greater predictability for business.
This market structure creates a paradox for German companies: under the climate policies of both Germany and the EU, they are required to phase out fossil fuels by 2045, yet only long-term contracts ensure stable pricing. The report’s authors warn that such conditions could threaten the competitiveness of German industry.
The publication recalls that when Germany enjoyed steady supplies of Russian pipeline gas, one megawatt-hour (MWh) of electricity generated by gas-fired power plants cost 17 euro. Today, the price has risen to 30 euro and is expected to increase further in the coming years due to German and EU legislation that incentivizes a shift away from fossil fuels, rendering their use increasingly unprofitable. If the price of one MWh climbs to 60 euro, production in many enterprises in the chemical and manufacturing sectors, as well as in paper, glass, and ceramics industries, will be at risk.
Against this backdrop, some German importers have begun signing long-term contracts with foreign suppliers, primarily from the US, the United Kingdom, and Norway. However, as Uniper pointed out, most companies remain reluctant to commit to agreements exceeding five years.