Further industrial gas savings would come at steep cost for Germany

German industry has been successful in reducing its consumption of gas relative to previous years, particularly in the second half of the year. On average, monthly gas use has declined by about 24% in H2 2022 relative to the 2018-2021 average which, if sustained, should be sufficient to avoid hard rationing this winter.

What you will learn:

• Although an overwhelming number of firms in manufacturing are reporting gas savings without production cuts, we find that price-driven demand destruction in energy-intensive industries has likely been behind most of the gas savings in German industry.
• Should a cold winter or other gas supply disruptions require additional gas savings over the near term, the costs to industry would be steep.
• The outlook for German industrial production in the coming months is weak—we are forecasting that gas-intensive sectors will continue contracting in the face of continuing price pressures.