The recent frequency of the German word Versorgungssicherheit (supply security) shows that Germans are worried about insufficient stocks. During the epidemic, Germans were worried about toilet paper supplies, recently they’ve switched to energy, and now even wood.
There are signs that Germans are hoarding wood in the mid-summer of nearly 40 degrees Celsius. German households may switch to wood for heating this winter as natural gas supplies remain tight, Deutsche Bank said in a recent report. Another statistics shows that in the first quarter of this year, the trade volume of German timber increased by nearly 25%, of which sawn timber increased by 23% and panel materials increased by 32%.
Nearly half of homes in Germany are heated by natural gas, which has been in short supply, soaring prices and unpredictable prospects since the Russian-Ukrainian conflict. From October this year, Germany will impose a heating surcharge, and natural gas prices are expected to rise further. Calculated for a family of four, the annual increase is about 500 euros. In this case, heating with wood is much cheaper.
German gas prices to triple early next year
There are worries that there is an imminent surtax on new gas-heated households. German Economy Minister Habeck announced at the end of July that from October this year, the tax will be levied between 0.015 and 0.05 euros per kilowatt-hour, and the lower limit is the annual increase of nearly 500 euros calculated above. However, if calculated at the highest rate of 0.05 euros, the annual extra gas bill for a family of four may increase by nearly 1,000 euros. According to German statistics, the average annual consumption of natural gas by a German household is about 20,000 kWh.
Klaus Müller, head of Germany’s energy regulator, the Federal Network Agency, believes that natural gas prices could triple by early 2023.
Prices are soaring and supply is not necessarily stable. Since July 27, Gazprom has reduced the supply of natural gas to Germany through the “Nord Stream 1” natural gas pipeline to 20% of the original gas transmission volume, while German domestic analysis generally believes that Germany Before November 1, I am afraid it will not be able to reach the previously set gas storage target of more than 90%, and even the current level of 68% is difficult to maintain.
Prof. Dr. Karen Pittel, director of the Energy, Climate and Resource Center of the German Ifo Institute for Economic Research said that whether the roadmap for gas storage in Germany can be realized depends largely on the natural gas imported from Russia. If Russia continues to send sufficient quantities of natural gas to Germany, the storage target is expected to be achieved.
The German government is now promoting a goal of “cutting natural gas consumption by 20% to ensure winter”. On the 1st, the EU began to implement a voluntary natural gas reduction agreement, that is, EU member states will reduce their natural gas demand by 15% on the basis of the average amount of the past five years from August 1 to March 31, 2023. . Germany, as a big natural gas consumer, has also set a target that surpasses that of the European Union.
Wood-burning fireplaces are in short supply
According to German media reports, the demand for wood has greatly increased the business of German sawmills. Since production cannot keep up with demand, the pressed sawdust pellets are still “hot” and loaded directly onto trucks.
Compared with skyrocketing natural gas prices, heating with wood is much cheaper. Customers have told German stove maker Günter Meurer that they don’t want to freeze in winter. Demand for wood-burning fireplaces has doubled compared to last year, and Günter Meurer is struggling to keep up. At present, orders for new customers are even lined up after this winter.
Demand for chimney sweeps has also increased by 30 to 40 percent, according to Alexis Gula, head of the German Chimney Sweeping Association (ZIV). His clients near Stuttgart told him that a year or two ago, a fireplace was used for warmth and extra heat, but now it is to ensure energy supply.
Germany lists this sawdust as a biomass function and provides subsidies at the government level, and the installation of this heating system can get up to 45% of the subsidy. Since the beginning of 2022, the German Federal Office for Economics and Export Control has received nearly 60,000 applications for the installation of biomass heating systems.
Demand for wood pellets in the European Union is expected to expand to 24.3 million tonnes this year, largely due to a surge in the installation of biomass heating systems in Germany and France, according to a new report from the USDA Foreign Agricultural Service Global Agricultural Information Network.
The report said that over the past 10 years, EU demand for sawdust has greatly exceeded EU internal production, mainly imported from Russia, the United States, Belarus and Ukraine. In April, the European Union banned the import of Russian wood pellets.
The report estimates that the EU has a wood pellet production capacity of around 25.8 million tonnes this year, with Germany being the EU’s largest producer of wood pellets, with production estimated at 3.3 million tonnes in 2021.
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