17 Dec The Future of Germany’s Energy Security
Gas prices in Europe have skyrocketed by 600% in 12 months, driven by a global surge in demand following the Covid-19-induced economic slowdown, spells of cold weather and weak flows of gas from Russia. It is expected that the continent’s gas supplies will soon fall to critical levels. The situation has highlighted the precarity of Europe’s energy security framework, and none more so than in Germany, whose decision to phase out both nuclear and coal and its reliance on Russian gas, leave it particularly vulnerable to fluctuations in supply.
Germany’s Green Transition
Germany currently ranks 13th in the world in the Climate Change Performance Index, and its newly elected coalition Government has announced ambitious new climate policies within weeks of taking office. These include a quest to generate 80% of its electricity from renewable resources by 2030, to enhance Germany’s long-term sustainability and energy security. With coal currently Germany’s primary electricity source, achieving this would require renewable electricity generation to almost double in less than a decade, and the €60 billion pledged thus far to support climate action and improve Germany’s infrastructure is unlikely to suffice. Without further private or public investment in renewable energy, and with a continued phase-out of nuclear and coal, Germany is likely to face further energy shortages. This may force it towards less secure energy options in the short-medium term, including increasing reliance on Russian gas.
The Future of Nord Stream 2
For a time, the German Government had hoped that Nord Stream 2 – a €10 billion pipeline bringing Russian gas to Germany – could be part of the solution. The project has long been opposed by the United States, the United Kingdom and a number of other European nations, which believe the pipeline will increase German reliance on Russian resources and undermine Ukraine’s economy and security. In July 2021, Germany and the United States reached a deal to allow the project to go ahead, on the proviso that, alongside promoting investments in Ukraine’senergy transition, should Russia attempt to use energy as a weapon against Ukraine, Germany would take action.
With an estimated 100,000 Russian troops now assembled on the Russia-Ukraine border, that time may now have come and Germany has come under increasing pressure from its allies to reconsider the project. New German Foreign Minister and co-Leader of The Greens, Annalena Baerbock, has announced that the project could not be formally approved in its current state because it does not fulfil the requirements of European energy law. She has also warned that if Russia-Ukraine tensions escalate, the pipeline ‘could not come into service’. However, Chancellor Olaf Scholz, an historical supporter of the pipeline, has been more opaque, talking vaguely of ‘consequences’ if Russia invades Ukraine but avoiding the opportunity to link the two issues together.
Where to Next?
The next steps around Germany’s energy future remains unclear. Blocking use of the Nord Stream 2 pipeline will cause immediate challenges to the nation’s resilience, with energy prices rising 11% within hours of Baerbock’s statement – a situation that will only worsen if Russia responds by limiting existing gas supplies.
Nuclear may seem to be an obvious solution to this predicament, particularly given Germany’s history as a nuclear powerhouse. However, ever since Japan’s Fukushima disaster in 2011, Germany has undergone a rapid nuclear-phase-out, which is set to be completed next year. A reversal of the phase-out is unlikely in the short term, given the Greens’ staunch opposition to nuclear. As such, if Germany wants to embed nuclear in its energy mix, it will have to rely on nuclear imports from France through the EU’s integrated energy system – which cannot provide a long-term sovereign solution.
Germany therefore finds itself in the unenviable position of seeking to balance its opposing short and long-term energy security interests, while not undermining its existing allies or aggravating its strategic rivals. Its choices will largely depend on the balance of power in its new coalition: the Greens are likely to encourage a rapid acceleration of the transition to renewables, while the SPD may be more willing to pursue the Nord Stream 2 pipeline, given they still believe gas to be ‘indispensable’ to the transition.
However, while particularly complex, Germany’s position is not unique. With the West’s strategic rivals dominating many of the natural resources required for renewable energy production, governments will need to balance short-term energy security with the need to rapidly invest in scaling up renewable energy over the longer term as a project of national resilience.