The law, which could be passed by parliament as early as this week, would pave the way for the government to bail out Uniper, Germany’s biggest importer of Russian gas. The amended energy law will also allow importers to pass on the higher cost of natural gas they source in spot markets to all their customers and thus avoid insolvency. “Natural gas has become a scarce commodity and in the present situation we have to make available all options in case of emergency and expand our toolbox again,” an official said, explaining the measures. The goal, officials say, is to avoid a repeat of 2008 when the collapse of Lehman Brothers rippled through the entire financial market, helping to trigger a global crisis. Germany’s energy sector has been in turmoil since mid-June, when Russian state gas exporter Gazprom cut gas flows through the Nord Stream 1 pipeline under the Baltic Sea by 60%. NS1 will undergo scheduled maintenance between July 11 and July 21, and many in the government fear gas flows may not resume after repairs are completed as the economic war between Russia and Germany escalates.

Officials have already warned that natural gas may have to be rationed to industrial customers this winter if Germany fails to fill gas storage facilities quickly enough before the cold spell. Deprived of supplies from Gazprom, importers have been forced to source natural gas from the direct market at much higher prices. However, they have not been able to pass these higher costs on to their customers, most of whom receive their gas under long-term contracts that are not subject to renegotiation. “If energy companies cannot pay the high prices or fulfill their contracts, they face financial difficulties and even insolvency,” the official said. “But if [they] collapse, which could cause a serious collapse of the entire market, right along the supply chain to the end consumer.” Uniper, which issued a profit warning last week and said it was in talks with the government about a bailout, is the highest-profile casualty of the crisis. He said the talks were about “stabilization measures” that could include guarantees, an increase in the current credit facility granted at the start of the year by state-owned bank KfW or the state taking a stake in the company. Most analysts believe that Berlin will bail out Uniper, with a package expected to amount to around 9 billion euros. The bailout deal could build on the relief provided to airline Lufthansa during the pandemic. Under the proposed amendments to the energy law, the German state will be able to participate in troubled companies of “vital infrastructure in the energy sector”, as it did in banks affected by the global financial crisis and during the Covid-19 pandemic. As part of the Lufthansa bailout, the state took a 20 percent stake in the airline. The amended law also includes a new “price adjustment” mechanism designed to “maintain supply chains as much as possible and prevent cascading effects,” the official said. It would essentially allow companies to pass on the additional cost of supplying natural gas to the spot markets by imposing a tax on all their natural gas customers.