Can Germany live without Russia's Nord Stream 2 gas?

Economy minister says Europe's largest economy could cope without imports

Germany has yet to build an import terminal that could handle shipments of liquefied natural gas. AP

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Germany earned a diplomatic round of applause for suspending the Nord Stream 2 gas pipeline in response to Russia’s escalation in Ukraine, but the decision leaves Chancellor Olaf Scholz facing a potential energy puzzle at home.

With nuclear and coal power already out of favour, Germany expects gas to keep the lights on in the coming years until a promised expansion of renewables produces enough power for the world’s fourth-largest economy.

However, 95 per cent of that gas is imported, with Russia the largest supplier, and if that route is politically toxic, then Germany is down another energy source with only 23 years left until the net zero deadline set by ministers in Berlin.

Russia’s former president Dmitry Medvedev rubbed it in with a message to Germany: “Welcome to the brave new world where Europeans are soon going to pay €2,000 ($2,270) for 1,000 cubic metres of natural gas.”

Robert Habeck, Germany’s Economy Minister, acknowledged on Wednesday that cutting off Russian gas completely would leave a big hole in the market and “drive prices higher” at a time when bills are already rising.

A total boycott has yet to be put on the table, since suspending Nord Stream 2 did not cut off any existing supplies, and Russian gas still flows through other pipes such as the Yamal-Europe route via Belarus and Poland.

However, European countries are under pressure to reduce their reliance on Russian gas more broadly, with Britain crowing that only 3 per cent of its supplies rely on Moscow’s co-operation.

Asked by a radio presenter if Germany could live without gas supplies from Russia, Mr Habeck replied: “Yes it can.”

LNG options

One option for Germany would be to buy liquefied natural gas, which requires no pipelines and can be shipped across oceans once it is cooled to minus 162°C and shrunk by 600 times in size.

A European diplomatic source said using LNG was "quite an interesting option" and that the EU was exploring importing gas from a wider range of suppliers than Russia.

Beyond the "political hot issue right now with Russia", the EU's Green Deal agenda is aiming to ensure the "independence and sovereignty" of Europe's energy supply, they said.

But using LNG requires special import terminals to handle the liquid fuel, turn it back into gas and pipe it to the power grid, and Germany has yet to have one of these.

Plans to build an import centre with two storage tanks in Brunsbuettel, north Germany, have long been mired in bureaucracy, with tentative dates for approval set back. Another proposed centre in Stade is some way off becoming reality.

Terminals in countries such as Spain are near full capacity and pipeline connections to Germany are far from perfect.

And LNG is not politically uncontroversial either because it could involve importing American gas extracted by fracking, a method that angers environmental campaigners.

The US provided more than a quarter of the LNG imported by EU countries last year, a federal agency said on Tuesday, while some of the rest was merely a Russian import in different form.

Another possibility is that Nord Stream 2 could be revived at a later date. Mr Scholz told regulators to reassess Germany’s energy security in light of developments in Ukraine but the position could change again if tensions cool.

There are also suggestions that the pipeline could be repurposed to transport hydrogen. But the insistence of former chancellor Angela Merkel that Nord Steam 2 is a purely economic initiative has become politically untenable as tension with Russia continues to mount.

During the latest crisis, Germany reported its gas stocks falling to a level described by officials as “certainly worrying” during winter.

Ministers want to phase out coal power by 2038 and there is little prospect of returning to nuclear with the Green party, born in anti-nuclear protests of the 1980s, in a powerful position in Berlin.

Instead, they are relying on a massive expansion of solar power, with photovoltaic panels installed on every suitable new roof, and wind energy, with 2 per cent of Germany’s territory pencilled in to host turbines.

Mr Scholz sounded a hopeful note on a visit to Washington this month that this process will “happen faster than many might imagine today”.

“The worst-case scenario for Putin is a successful energy transition in Europe and Germany,” said Constantin Zerger, the head of an environmental action group.

Updated: February 24, 2022, 4:37 AM
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