German industry may not fully recover to the levels observed before the energy crisis due to high prices for imported liquefied natural gas (LNG), says Markus Krebber, chief executive officer of the German energy company RWE.
"Gas prices in continental Europe, and especially in Germany, are now structurally higher because at the end of the day we are dependent on LNG imports," he told the Financial Times. "German industry is at a disadvantage."
Gas prices in Europe have fallen by about 90% from peak levels observed in 2022, but remain about two-thirds higher than in 2019, the FT writes, citing data from Argus.
Krebber criticized the decision of Angela Merkel's government to abandon nuclear energy, made in 2011, without finding an alternative to Russian gas.
"If you know exactly what you want to give up, you need to immediately start thinking about introducing new ones technologies," he noted.
Analysts are pessimistic about the prospects for the German economy, the largest in Europe. According to estimates from Germany's five leading research institutes, the country's GDP will grow by only 0.1% in 2024 due to a decline in exports and weak domestic demand. The German economy contracted 0.3% in 2023.
Natural gas demand in Europe's industrial sector fell 24% in 2023 compared to 2019, according to S&P Global Commodity Insights. Company experts believe that about 6-10% of European needs will be lost irretrievably due to the destruction of demand.
At the same time, the United States is pursuing a consistent and comprehensive policy in stimulating the return of production capacity to the country, said Krebber. "Europe has the same intentions, but does not yet have the right measures," he added.
As a survey conducted by the German Chamber of Commerce and Industry last September showed, 43% of large industrial companies intend to move their business abroad borders of Germany, with the USA being a priority. Last year, German companies announced investments in projects in the United States amounting to $15.7 billion, up from $8.2 billion a year earlier, according to fDi Markets.
