RWE CEO Markus Krebber has said that he expects that German industry will not recover to pre-Ukraine war levels because of elevated energy prices.

With flows of energy from Russia to Germany now a fraction of what they were before the Russian invasion of Ukraine, Germany is dependent on gas from Norway, the Middle East and USA, prompting Mr Krebber to say that gas “prices in continental Europe, especially in Germany, are structurally higher now, because we, in the end, depend on LNG imports. The German industry has a disadvantage.”

Although prices have dropped 90% from their astronomical peak in 2022, they are still around two-thirds higher than their level at this time of year in 2019, an indicator of disadvantage to which Mr Krebber referred. This is reflected in demand, with use of natural gas in March of this year being 21% lower than the average for March between 2017 and 2021. “You’re going to see a bit of recovery, but I think we’re going to see a significant structural demand destruction in the energy-intensive industries,” Mr Krebber opined. He also criticised the decision of former Chancellor Angela Merkel in 2011, following the 2011 Fukushima Nuclear Disaster, to shut down Germany’s fleet of nuclear power plants, without having an alternative supply of energy to Russia, saying “When you know exactly what you want to shut down, you need to immediately start thinking about ‘how do I get the new technology in the ground?’”

A similar criticism was made in the last few weeks by Fatih Birol, head of the International Energy Agency, who said that Europe made “two historic monumental mistakes” – in shutting down nuclear power generation capacity, and by relying on Russian gas. Birol made a very similar assessment of European industry as Mr Krebber did of German industry, saying the “existing industries, especially the heavy industries, are experiencing, and going to experience, a significant cost disadvantage compared to other major economies such as China and the United States.”

Electricity prices in the EU are typically around two to three times higher than those in the United States.