With the Russian gas cut, many in Germany were expecting a cold winter
When Russian President Vladimir Putin shut off the gas valve to Europe, Germany feared more than anyone else a winter blackout. Knowing all too well how Germany’s industrial powerhouse was so dependent on and vulnerable to Russian gas, government officials scrambled to secure alternative supplies.
But now, months later, Christmas markets across Germany are lit up. There is a cautious optimism in the mulled wine scented air. The German government’s hastily devised strategy to move away from Russian gas has so far been successful.
Chancellor Olaf Scholz told parliament on Wednesday that “this winter’s energy security has been ensured”.
The German government has pursued a desperate program of high-cost buying in markets around the world. Thanks to this, the national gas reserves have been replenished.
It’s not all. On the windswept coast of the North Sea, the fastest ever liquefied natural gas (LNG) import terminal has just been built.
LNG refers to natural gas that has been cooled and liquefied to reduce its volume and make it easier to transport. When it reaches its destination, it is put back on gas.
The German government is notorious for its slow bureaucracy. Projects like this normally take years to materialize, but the government has cut a lot of red tape and completed the base in less than 200 days.
The terminal’s most important LNG floating storage and regasification unit (FSRU) is not yet docked. The vessel, which can convert LNG back into gas, will be chartered for 200,000 euros ($290,000) per day.
Meanwhile, LNG from the United States, Norway, the United Arab Emirates (UAE) and other countries will arrive at the port of Wilhelmshaven in the coming weeks. Uniper, which operates the LNG terminal, has kept its mouth shut about the supplier but insists it has a deal.
Five more LNG terminals are planned to be built, most of which are expected to be completed next year.
The fate of German industry depends on it.
“When we run out of gas, we have to turn off the furnace,” said Ernst Buchov, who runs a brick factory a half-hour drive from Wilhelmshaven.
The bricks are fired at a high temperature of 1200 degrees in a huge kiln. Bukhov says he hopes to one day use green hydrogen, but it will take some time. At the moment, everything depends on a stable gas supply.
“It’s not just the politicians’ fault. The industry wanted a gas contract with Russia,” Bukhov said.
A constant supply of gas is essential for the Bukhov brick factory
Just a year ago, Russian gas accounted for 60% of Germany’s gas demand, mostly transported via the Nord Stream pipeline.
Despite considerable opposition from parliament and the public, the German government was still considering opening “Nord Stream 2” at the time. The pipeline plan would double the amount of gas sent from Russia to Europe via Germany.
Federal energy officials say Germany can now get by without Russian gas. But experts say that to avoid gas shortages during the winter, LNG terminals will need to be operational by the beginning of the year and domestic gas consumption will need to be cut by 20%.
Achieving this status alone could be considered a national feat. But it comes at a huge cost.
Germany is an economic superpower and you can get most of what you want. Increased German demand for LNG has also accelerated global demand.
As a result, poor countries such as Bangladesh and Pakistan may have remained vulnerable.
“High LNG prices are preventing many countries, especially emerging ones, from getting the LNG they need,” said Andreas Goldtau, a professor at the Willy Brandt School of Public Policy in Germany.
These countries “have a lower purchasing power than European countries, especially Germany”. This could lead to frequent power outages, increasing reliance on “dirty” fossil fuels like coal (rather than natural gas), he warned.
And what about Germany’s ambitions for a greener future? LNG is, after all, a fossil fuel.
Everyone involved in the Wilhelmshaven project agrees that LNG is an “interim” fuel.
Unipar has promised to build a hydrogen-powered plant next to the LNG terminal. This sparked an ambitious plan in the Wilhelmshaven city council. Mayor Carsten Feist said an LNG terminal wouldn’t bring the city the jobs it needs, but a green energy hub could.
“For the Earth’s climate to be habitable in 50 to 100 years, we need an energy transition. Much of what Germany needs will arrive here in Wilhelmshaven.”
The biggest cost is probably the literal cost of the equipment itself.
The government has invested over 6 billion euros in six LNG terminals. This is more than double the originally planned budget and could increase further next year, the ministers themselves admit.
Germany learned too late the value of a secure energy supply. The price paid.
