Germany's Federal Ministry for Economic Affairs is drafting a proposal for a state-run strategic gas stockpile for crisis response, with total setup costs capped at €1.5 billion ($1.71 billion), according to Reuters.

The reserve is designed to cushion the country against extreme energy crises, including sabotage targeting critical energy infrastructure or acute global gas supply crunches.

Germany has ramped up efforts to shore up its energy security since the Russia-Ukraine conflict, which forced European nations to rapidly phase out Russian gas imports and laid bare the fragility of the bloc's energy systems.

As part of its fossil fuel phase-out roadmap, the German federal government reached a deal back in 2020 to retire all coal-fired power plants by 2038.

The blueprint is slated for cabinet approval in mid-August, and the strategic reserve will hold roughly 24 TWh of natural gas, accounting for nearly 10% of Germany's overall gas storage capacity.

Expenses covering facility construction, gas procurement and injection into storage tanks are projected to range from €1.2 billion to €1.5 billion, to be allocated over 2027 and 2028. Annual operational expenses are forecast at €150 million to €180 million on top of the upfront investment.

A surcharge levied on domestic gas consumers will fund the entire strategic reserve scheme.