If Russia continues to reduce natural gas flows, wood heating could be used in Germany, according to Deutsche Bank. The bank indicated that it expects gas demand to fall by 10% compared to 2021 levels.
German households could turn to firewood as a heating source this winter as gas supplies remain limited, Deutsche Bank wrote, noting that it expects gas consumption in Germany to be 10% lower than in 2021 due to savings by private individuals and high gas prices. It also indicated that coal and lignite could become substitutes for natural gas in the industrial energy sector.
"There is much uncertainty, especially regarding our assumptions about supply from other countries and demand," the bank said in a statement.
The latest figure from Deutsche Bank comes as Europe prepares for a potentially colder winter and as Russia's invasion of Ukraine has raised questions about the stability of future natural gas flows. Moscow has already restricted supplies to several countries, including Bulgaria and Poland, because they refused to make payments in roubles, and the EU is concerned that without an alternative source, the bloc will not be able to secure sufficient energy reserves.
Forecasts show no signs of improvement. The Russian state oil giant Gazprom gave conflicting messages on Wednesday as to whether gas flows would resume in the near future via the Nord Stream 1 pipeline after it was closed for scheduled maintenance until 21 July.
The Deutsche Bank assertion that households could turn to the use of firewood for heating is not without foundation. Last winter, when electricity supplies were interrupted, Texas households began using firewood and even furniture to keep warm. Deutsche Bank believes that such a shift would further reduce gas demand in Germany.
"Both gas saving and substitution have led to a decline in gas consumption in Germany by more than 14% in the first five months of 2022 compared to the previous year," the bank's report stated, adding that as energy costs rise, some production plants in Germany could be closed, further complicating the situation.