Germans could switch to wood this winter to heat their homes as Russia withholds natural gas, Deutsche Bank says

German households could turn to wood as a heating source this winter as gas supplies remain tight while Russia restricts flows to Europe, according to a note.

Private households saving and high gas prices are expected to lead to a 10% decrease in gas consumption in Germany. Coal and lignite could replace natural gas in the power sector.

There are a lot of elements of uncertainty, especially with respect to our assumptions on supply from other countries and demand.

Europe braces for a potentially colder winter than normal, and as Russia's invasion of Ukraine raises questions about the future of natural gas flows. The EU is worried that it won't be able to ensure enough energy stores without an alternative source because of Moscow's actions.

The outlook is not showing signs of improvement. Russia's state-run oil giant, Gazprom, sent conflicting messages about whether gas flows would be restored to theNord Stream 1 in the near future after it was shut off for scheduled maintenance.

There is merit to the assertion that households could use wood for heat. Texas households used to burn wood and furniture to heat their homes during the winter. The switch would cause gas demand in Germany to go down.

Savings and substitution have led to a reduction in German gas consumption in the first five months of the year. The bank said that some facilities in Germany could close due to rising energy costs.