Why Is Germany Struggling to Settle Its Energy Issues?

The “nightmare scenario”, as Robert Habeck described it, was avoided this week by Gazprom, a Russian oil and gas company. This follows ten days of maintenance.

European officials feared Moscow would close the spigot in retaliation for Europe’s opposition to Russia’s war in Ukraine. The gas was restored to 40% capacity on Thursday.

Despite the partial restart, however, Europe’s energy situation is still extremely fragile, especially in Germany.

Johan Lilliestam (of Potsdam), who heads Germany’s Energy Transitions team at the Organization of Germany for Progressive Sustainability Studies, said that the “current crisis has devastating economic and social implications.” Yahoo News reported that Lilliestam used the phrase “currently” to refer to the crisis. Lilliestam stated that key industries like glass, chemicals, and fertilizer could all go under if Germany loses its supply of gas. Consumers already have to deal with higher energy prices. Lilliestam believes that countries might be tempted not to use their gas resources, which could lead to a collapse of the European Union and harm to the single EU market.

Even if Gazprom’s taps were again open, Raphael Hanoteaux senior policy adviser on gay politics at E3G said that “the damage is already done”. He was referring both to the sky-high prices of gas and the deep erosion of trust in continuing to rely upon Gazprom. Europe is now more aware that Russia could harm its economy, especially Germany’s, and has decided to diversify and reduce demand.

Ursula von der Leyen (President of the European Commission) urged 27 EU member states to reduce energy consumption by 15%, between Aug. 1st and April next year — and gave the EU the authority to impose rationing on natural gas.

“Russia is extorting us. Von der Leyen claimed that Russia is using energy to make war. She stated that it was possible for Russia to cut off all Russian gas. “And that could hit the entire European Union.”

Gazprom, a gas company controlled by the Russian government that had supplied 40% of Europe’s gas and 55% of Germany’s, has recently behaved in a way that has damaged its reputation. It has stopped supplying gas to four EU nations and significantly reduced supplies to eight others. The EU is now resolved to stop relying on natural gas from Gazprom. It will have to restart shut-down coal-fired power units at the risk of going against commitments to lower greenhouse gas emissions.

Germany, Europe’s largest producer, could face a difficult future without Gazprom gas. Germany has been busy building its 1st terminal for LNG (liquefied natural gas) and is now preparing to decommission the last of its nuclear power reactors. Germany is the West’s most dependent country on Russian gas. In June Gazprom cut off pipeline flows by 60% citing a problem with its turbines & EU sanctions regarding the war in Ukraine. Officials put Germany in phase 2 (the second of three-stage) of their emergency gas plan. This allowed utilities and the government to charge higher prices and allow them to use more coal.

In light of the energy insecurity, many historic buildings in Germany are not lit at night. Street lights are dimmed. Despite the heatwave, public buildings have air conditioning set at 80.6 degrees Fahrenheit. Germans are being urged not to shower more than once a day and to only take shorter breaks when they do.

German households, which use natural gas as their heating source, are being warned to expect a tripling/quadrupling in prices. Lower prices have led to the purchase of more costly LNG. Officials are also concerned about Germany’s gas storage capacities, which are currently at only 65%. To power the country through winter, this level should be at 90%.

Lilliestam said, “We aren’t reducing storage. But the problem with them is that we don’t fill them enough.”

Analysts claim that Germany’s illusions regarding Russia as a reliable energy partner have collapsed. Jorg Haas, head, of Heinrich Boll Foundation’s International Politics Division in Berlin, stated that the German-Russian natural-gas relationship will not be restored. Russian President Vladimir Putin’s war on Ukraine and the power-playing he continues playing have eroded the needed trust.

According to Haas, the two nations’ joint experience with energy extends back to the Soviet era. He said that at one point, the Soviet Union, which possessed gas but lacked the means to provide it, and Germany’s industrialized societies—which desired affordable natural gas—were an ideal fit.
A 759-mile pipeline linking northwest Russia with Germany, Nord Stream 1, was approved by Schroder just days before he resigned from office in 2005. His appointment to the Gazprom board was made within the week. German Vice Chancellor Habeck now considers the German government’s decision to increase Gazprom dependence “a grievous error.”

While others were building LNG terminals in Germany, warning Berlin that Putin was a danger, Germany’s dependence on Russian natural gas grew. It then moved to eliminate nuclear power in 2011 by rapidly phasing out its use. It decided to end its dependence on coal after listening to warnings by climate scientists.

There were more notice signs that were not taken into consideration. Germany largely ignored the warning signs after Russia annexed Ukraine’s the Crimean Peninsula. In 2014, Germany approved Nord Stream 2, a second pipeline, during Angela Merkel’s chancellorship. Plans to certify the 2nd pipeline, which was due to start pumping this spring, were abandoned after Russia’s February invasion.

Germany believed that Russian trade would bring stability to both of their countries. Hanoteaux added that Germany “also convinced the EU about its strategy and managed to get others to agree with it.”

Russia’s invasion of Ukraine proved the absurdity of these moves. Gazprom began cutting supplies immediately after sanctions were placed on Russia by the EU and European countries exported arms to Ukraine. Gazprom cited technical problems that they couldn’t fix because of sanctions an excuse Berlin doesn’t buy. Gazprom sent force majeure notices to customers last week, informing them that it might be unable to fulfill contracted orders due to forces beyond its control.

While renewables account for nearly half the electricity in Germany, and that number remains to raise, the country is still heavily dependent on natural gas for heating & industry. The government decided to replace the shortfall with a dozen coal-fired power plants that were being retired, much to the dismay and concern of scientists. This is a significant step backward in climate change mitigation. Although the International Energy Agency supports the move in the short term, some climate groups feel it won’t be catastrophic if they’re only used for 18 to 24 months.

Analysts find Germany’s recent interest in building LNG Terminals even more alarming. At least one terminal is currently under construction, and there are four more planned. Yahoo News’ Sarah Brown, energy analyst at Ember (A London-based think tank), stated that some proposals & actions are driven by panic, rather than a robust valuation of the problems and correct solutions. “It’s not enough to simply replace one imported fossil fuel dependency with another. It’s important that we avoid sourcing LNG from foreign countries in order to ‘diversify” gas supply.

German gas dependence could be locked for decades if billions are invested in LNG infrastructure. Hanoteaux said, “It’s hard to understand why policymakers would choose this gamble.”

Lilliestam said that although these terminals are needed to buffer any future problems, in the long term they might become a problem.

There is a huge debate about closing Germany’s last three nuclear power plants. These plants currently produce 6% of Germany’s electricity and are due to be retired. This follows a long-running campaign by Green Party. According to media reports, there is a chance that the Green Party could lift demand for the plant’s imminent closure by imposing speed limits on autobahns — another goal of its Green Party.

Thorfinn Stainforth at the Institute for European Environmental Policy believes that new nuclear plants should not be built. But he does not support them. Yahoo News reported that Germany closing all of its nuclear plants is a serious, major error.

“It may seem like good news that Russia is getting rid of its gas. Lilliestam asked, “But the question is, what are we substituting it?” pointing out that more wind farms would not be available in time for this winter.

Gazprom may shut off all its gas supplies in the next months. Germany could end up asking for assistance from countries that warned it not to go to Russia.

Despite all the obstacles ahead and the looming “gastastrophe,” for Europe this winter according to The Economist, some people see the light at one end of the tunnel.

Nguyen expressed his optimism about the situation. When it comes to clarifications that benefit the climate, energy supply security, and customers, they all have the same explanation. This is how to increase efficiency, deploy additional renewables, and renovate homes. I believe that we all will be able to get on the train that will accelerate this transformation.