MNI BRIEF: A 26% German Gas Cut Could Mean 3% Sales Dip - IWH

Cutting gas use by around a quarter would lead German industry to lose only 3% of total sales, a study by one of the country’s foremost economic think tanks argues (in German). But the passthrough of rising gas prices could also mean its most gas-intensive products -- especially chemicals -- would see a loss of global demand and a need for increased imports.

Around 90% of Germany’s total gas consumption is linked to the making of just 300 products -- representing only a small minority of total industrial output - according to a report by the Leibniz Institute for Economic Research Halle (IWH). If products with high gas intensity and high import substitutability were no longer manufactured in Germany, German industry would save around 26% of its total gas consumption, but lose less than 3% of its sales.

However, a quadrupling of the gas price for industrial customers would mean an average increase in production costs of 12 cents per euro of sales. Were prices to rise 12% for the five basic chemical products with the highest gas consumption per euro of sales, their production in Germany would no longer be internationally competitive.