Carbon Critical

March 31, 2022

Germany Finally Starts to Turn from Russian Gas

There was no alternative for Germany to buying gas from Vladimir Putin, until there was. Russia’s invasion of Ukraine has reminded policymakers in Berlin that emergency action in the energy sector is possible.

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A graph showing from which countries Germany imports gas
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In September 2018 then German Foreign Minister Heiko Maas said, “there is no German dependence on Russia, certainly not in energy questions.”  Yet by March 2022 German Economy and Climate Minister Robert Habeck was forced to admit: “The bitter news is: We still need Russian gas … it takes more than three weeks to undo the strategic mistakes of previous decades.” 

What happened?

Well, for a start, Maas was misleading his audience. Germany does depend on Russian gas: 55 percent of the gas consumed in the country comes from Russia, and 25 percent of Germany’s final energy comes from gas. In the short-term it would be physically impossible to replace all that Russian gas with alternative supplies, and therefore German Chancellor Olaf Scholz opposes an energy embargo that he says would “plunge our country and all of Europe into a recession.” Germany, Scholz says, must be able to maintain the sanctions it imposes, which “must not hit the European countries harder than the Russian leadership.”

Some European Union member states and some German economists make a good case that an embargo would be worth the cost, arguing that Russia’s energy sales are helping Putin soften the blow of other sanctions. The debate is tricky: It is far from clear that an embargo (or punitive tariffs) would get Russia to halt its invasion of Ukraine. It is clear that losing Russian gas would damage the German economy and be incredibly costly and difficult for the German government to manage. This is dependence, or perhaps co-dependence, since Russia has so far been content to continue selling a vital resource to those on the other side of a European war, although Putin’s March 23 demand to be paid in rubles for gas deliveries has made an interruption of trade more likely.

Pipelines for Gas

Germany’s gas relationship with Russia goes back to 1970, when Chancellor Willy Brandt and his government backed a gas-for-pipelines deal between German and Soviet companies. Even then, NATO countries had concerns about the geopolitical impact of Soviet hydrocarbon exports: in 1962 the United States had pushed through an embargo on exports of large diameter pipes to the USSR. This set a pattern of American sanctions failing to stop Germany buying gas from its giant near-neighbor in the East, which repeated itself over the West-Siberian pipeline in the early 1980s and the Nord Stream 2 pipeline in the late 2010s.

Since the arrival of those first Soviet gas deliveries in 1973, imports from the USSR and then Russia have increased steadily. Russians and Europeans built new pipelines to bypass Ukraine, an important goal of the Russian leadership after the collapse of the Soviet Union. In 2005 President Vladimir Putin and Chancellor Gerhard Schröder signed an agreement to build the Nord Stream 1 pipeline that would bring gas directly from Russia to Germany. For Schröder, this was the start of a lucrative friendship with the Russian dictator. Schröder’s successor Angela Merkel attended the opening ceremony for Nord Stream 1 in 2011 and supported its controversial sister pipeline throughout her time in office, describing it for years as a “purely private enterprise.”

Over recent decades, gas—and Russian gas—have become more important to the German economy. When Ukrainian President Volodymyr Zelensky asked the Bundestag for “an embargo on everything that finances this war”—the EU has spent over €20 billion on Russian fossil fuels since the invasion of Ukraine—German leaders were not in a position to grant his request. This is dependence.

Geography and Geology

The main reasons Germany has bought gas from Putin’s Russia are that it is relatively close, and its gas is relatively cheap. Canada felt able to ban Russian oil imports on February 28 because it is far away and possesses huge hydrocarbon reserves. Germany, on the other hand, does not have much gas on its own territory, and is already importing about as much as it can from allies and partners like Norway and the Netherlands. EU member states even closer to Russia, like Bulgaria, Finland, and Latvia, are even more dependent on Russian imports despite security concerns. 

German politicians are not responsible for geography or geology. Nor are they the only decision-makers involved in the import of Russian gas: in discussions of the gas market, “Germany” refers not only to the chancellery or Bundestag but to a range of actors including energy companies, transmission system operators, and EU regulators. Germany and Europe have successfully facilitated the construction of bidirectional interconnector pipelines between countries, so that, for example, Ukraine can import gas from the West instead of buying directly from its threatening neighbor.

What transformative action German politicians did take in the energy sector was focused on electricity, not heating or industry, where most gas is burned. As for phasing-out fossil fuels, Germany started with coal, which is even more damaging to the climate and human lungs than gas. And despite the ongoing phaseouts of coal and nuclear power, Germany has managed to keep its overall gas consumption roughly flat in the 21st century. Critics in the United States would do well to remember the US’ past dependence on authoritarian Middle Eastern oil exporters, and its current dependence on semi-conductors from Taiwan, where China may one day launch its own so-called special military operation.

And yet, excuses aside, there is a feeling that Germany failed to heed the warning shot.

Eight Lost Years

The last time Vladimir Putin invaded Ukraine, in 2014, it appeared that Germany might make a serious effort to give up Russian gas, which at that time made up 38 percent of domestic consumption. Merkel acknowledged Europe’s “dependence” on Russian oil and gas, saying Germany would take a “fresh look at its whole energy policy.” In the face of German-backed EU sanctions and political pressure, the German chemical giant BASF halted its plans to trade Germany’s largest gas storage facility in exchange for shares of gas fields in Russia.

However, as the shock of Russia’s illegal annexation of Crimea wore off, Germany returned to business as usual for oil and gas, and imports from Russia continued to grow. The German government approved the construction of Nord Stream 2 in 2015 and stood by its decision despite increasingly strident criticism from European and North American partners. The BASF-Gazprom swap was allowed to go ahead in 2015; Gazprom now owns 20 percent of all the gas storage in Germany and kept this storage nearly empty ahead of the war. The state-owned Russian oil company Rosneft was allowed to take a majority share in the PCK Schwedt oil refinery in 2017—and provisionally increase its share further as late as February 23, 2022. An Economy and Climate Ministry that has to read BP reports to find out exactly what percentage of German gas comes from which country, since German law doesn’t require energy companies to report that data, cannot have been especially focused on the Russian dependency problem.   

Some things have changed since 2014. In that year a young member of the Bundestag, Annalena Baerbock, asked a formal parliamentary question about the diversification of gas supply. The government at the time, a coalition of Merkel’s Christian Democrats (CDU/CSU) and the Social Democrats (SPD), calmly responded that it had “no knowledge” of any plans for LNG terminals that would enable the import of gas from alternate suppliers. Today Baerbock, of the Green party, is the foreign minister of a new governing coalition working frantically to fast-track the construction of LNG terminals in Germany and secure new gas supplies, whether climate-friendly (green hydrogen from the UAE) or planet-warming (LNG from Qatar).

The Greens, who are in a governing coalition with the SPD and the pro-business Free Democrats, are not the only ones reevaluating their assumptions in the face of war. Once the most supportive of Nord Stream 2, the SPD stood aside when their Chancellor Scholz and his  new government used political tools to halt the pipeline two days before Putin started his war.

Never mind that the pipeline was already completed—the European energy companies that financed it had to simply write down billion dollar loans for the sake of national security. The CDU, Merkel’s party, now wants to shut down Nord Stream 1. The FDP, a party of fiscal hawks, are backing expensive moves to subsidize energy efficient improvements in homes and speed up the switch to 100 percent renewable electricity, with party leader Finance Minister Christian Lindner dubbing renewables “freedom energy.”

If the European Commission now says it is possible to reduce Russian gas imports by two thirds in 2022, and Robert Habeck says Germany can be “essentially independent” of Russian gas by 2024, then it was possible to do a lot more in the eight years since Russia last invaded a European neighbor. 

The Feebleness of “Alternativlos”

One of Merkel’s characteristic words was alternativlos,” literally “alternative-less.” She used it most to describe Germany’s policy during the euro crisis of the early 2010s. Sigmar Gabriel, who served as her economy minister at the time of the Crimea annexation and later as foreign minister, used a variation of the term in 2014 to claim there were “no reasonable alternatives” to importing gas from Russia.

But things only seem alternativlos until they aren’t. Russia’s invasion of Ukraine has reminded German policymakers that emergency action in the energy sector is sometimes required. The next step is to recognize that the climate crisis has plunged them into a permanent energy emergency that demands this scale of action every year for the next few decades.

Noah J. Gordon is INTERNATIONALE POLITIK QUARTERLY’s climate columnist and an associate fellow in the Europe Program at the Carnegie Endowment for International Peace in Washington, DC.

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