Germany Pushing For $10 Billion Expansion Of Russian Gas Pipeline
Despite all of the talk in recent years about a full-scale transition to renewable energy, Germany remains heavily dependent upon fossil fuels for the continued functioning of its various energy, transportation, industrial, and economic systems. In fact, since the country prioritized closing down its nuclear power stations, it has not gotten nearly as far as it could have shutting down fossil power plants instead. That’s not to say Germany should have taken another route, but that’s the reality of the situation.
To illustrate this point in a rather blunt way, I’ll simply draw attention to German Chancellor Angela Merkel’s recent and ongoing efforts to push through a $10 billion Russian natural gas pipeline expansion.
As would be expected considering the political climate, the project, which is being led by Gazprom PJSC, is being sold publicly as one intended to ensure that the country “has enough gas to underpin an unprecedented transition from the coal and nuclear plants, which are being closed, to a future dominated by renewable energy.” Coal-fired power plants currently supply around 40% of Germany’s electricity needs.
Greenwashing aside though, what are the implications of the push for the pipeline expansion? Considering that the expansion would double the capacity of the pipeline — from 55 billion cubic meters of gas (roughly two-thirds of German gas demand) to 110 billion cubic meters of gas — the intent is clearly there to, at the very least, remain dependent upon imported natural gas for the foreseeable future.
Considering the rapid phaseout of nuclear energy reliance in the country, this shouldn’t be too surprising. It does seem to stand in contrast to much of the greenwashing rhetoric of recent years, though. It’s a situation that echoes somewhat the disparity between official electric vehicle sales goals in Germany and the very lackluster sales figures of 2017 (to date).
Bloomberg provides more: “Already Europe’s biggest gas user, Germany gets about 40 percent of what it consumes from Russia, the world’s largest exporter, according to industry consultant Wood Mackenzie Ltd. in London. That dependence is only going to increase by 2025 to more than 50 percent, especially with output from the Netherlands, Germany’s western neighbor, set to drop in coming years.
“The Gazprom project, known as Nord Stream 2, also will allow for deliveries elsewhere in Europe, making Germany an even more important hub for distributions across the continent. Russia already supplies more than 20 countries with gas used to run power plants, heat homes and make chemicals. … Transporting gas through Nord Stream to Germany is about 40 percent cheaper than through land-based pipes via Ukraine, according to Molnar. Russian gas at the German border cost $5.07 a million British thermal units in May, up 28 percent from a 12-year low in September but 45 percent below its 10-year average, according to International Monetary Fund data.
“Germany, the UK, France, Belgium and the Netherlands will likely benefit from lower prices, according to Brussels-based think tank Bruegel. Gazprom would also avoid transit fees paid to use pipelines in Ukraine and Poland, Bruegel said. The company plans to reduce flows via Ukraine after 2019.”
Something that should be noted here is that local opposition can delay infrastructure project approval in Germany. According to the Ministry of Energy and Infrastructure in the state of Mecklenburg-Vorpommern, a hearing on the matter is currently scheduled to begin on July 17th in Stralsund.
Something else that should be noted here, that’s probably even more important, is that Germany is running behind when it comes to meeting its 2020 greenhouse gas emissions reductions goals. Those goals — to reduce official carbon emissions by 40% as compared to 1990 levels by 2020 — are looking fairly unlikely to be achieved as things stand currently.
Photo by antjeverena (some rights reserved)
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