Germany Seeks Alternatives to Russian Natural Gas

• Ensuring Germany’s energy security
• LNG as a temporary bridge to the future
• Lots more change to come

Ensuring Germany’s energy security

At present, Germany imports more than half of the natural gas it uses from Russia, a situation many decision-makers find no longer tenable.

In late February, Berlin halted the certification of the EUR 11 billion Nord Stream 2 Baltic Sea gas pipeline project, designed to double the flow of Russian gas directly to Germany, effectively killing it for the foreseeable future.

"We will do more to ensure our country's energy security and we will change course in order to overcome our import dependency on single energy suppliers," German Chancellor Olaf Scholz said in a statement. "The events of the last few days and weeks have shown us that a responsible, forward-looking energy policy is not only crucial for our economy and our climate. But also crucial for our security.”

That means significant repercussions for companies doing business in Germany.

“The situation is very volatile at the moment,” says Germany Trade & Invest CEO Robert Hermann. “But all indications are that the orientation away from Russia energy will continue for the foreseeable future. This is a fundamental shift.”

The Ministry for Economic Affairs and Climate Action’s “Energy Security Progress Report” of March 25, 2022 projected that Germany could virtually or completely phase out Russian oil and coal by the end of the year. It also predicted that the country could reduce its gas imports from Russia to ten percent by mid-2024.

LNG as a temporary bridge to the future

Germany has announced it will accelerate work on two liquid natural gas (LNG) terminals in Brunsbüttel and Wilhelmshaven as a short-term way of diversifying its gas supplies. Germany’s national developmental bank KfW has signed a memorandum of understanding with Dutch state company Gasunie and private German firm RWE to construct the Brunsbüttel facility.

“It’s necessary to reduce our dependency on Russian imports as quickly as possible,” German Minister for Economic Affairs and Climate Action Robert Habeck said in a statement. “With a LNG terminal in Brunsbüttel, we are increasing our import options. LNG terminals are essentially another way of bypassing [Russia].” Habeck added that the terminal could later be converted to facility for more environmental friendly green hydrogen derivatives.

While part of its immediate plans, the government defines LNG, which is not necessarily produced in ecological fashion, as a “bridge energy source.” Professor Bruno Burger from the Fraunhofer Institute for Solar Energy Systems (ISE) in Freiburg warns that Germany should not make itself dependent on LNG.

“We urgently need to break this dependency,” Burger said in an interview with radio station HR2. “We have to expand renewable energy and quick – more quickly than we ever thought.” Burger adds that expanding photovoltaic power (PV) in Germany could be achieved most rapidly, followed by onshore wind power.

Lots more change to come

What does the shift mean in the medium term? Germany was already committed before Russia attacked Ukraine to transitioning to clean energy by 2035. The attack has added considerable motivation to move the timetable forward.

“Without any doubt, the tempo of the transition to sustainable energy sources will increase,” says Germany Trade & Invest Director of Energy, Construction and Environmental Technologies Thomas Grigoleit. “There is a lot greater urgency now, and that’s going to affect the market. We have no alternative but to break our dependency on fossil fuels.”

No one thinks that there is a comprehensive way out of the dilemma in the months to come. But Professor Claudia Kemfert, the director of the Energy, Transportation, and Environment department at the German Institute for Economic Research (DIW), believes a solution is entirely possible – at least in the medium term.

“We could have 100 percent renewable electricity by 2030 and have converted out entire energy economy to renewables by 2035,” Kemfert told German broadcaster ARD. Kemfert and colleagues are also calling for significant increases in government programs to make buildings more energy efficient and encourage technologies like heat pumps.

“Claudia Kemfert believes it’s possible for Germany to convert to one hundred percent renewables by 2038, and I personally think she’s right,” says Grigoleit. “I remain totally optimistic that we can do this. What we lacked in the past was the level of commitment, also from industry, we’re seeing now. Not so long ago, some people said if we have ten percent renewables in the mix, the whole system will break down. Now we have 40 to 50 percent, and on sunny and windy days in summer, renewables can cover almost 100 percent of our energy needs. In any case, we have no choice.”