"A diversified supply, capable of meeting our energy needs now without compromising our climate goals – it's a tricky prospect to pull off, but failure is not an option," argues Thomas Matussek.
In July, former German chancellor Gerhard Schröder revealed that he had recently travelled to Moscow to meet with Russian president Vladimir Putin.
Speaking to the media, he admitted the pair had spoken about the issue every German is thinking about: Russian gas and the prospect of a cold winter.
Whilst the former chancellor continues to hold close ties to the Kremlin, the rest of Germany is moving in the other direction.
Russian supplies from Nord Stream 1 -- the pipeline that brings gas from Russia to Germany -- are down to 20% and Germany's current chancellor, Olaf Scholz, has made public commitments to explore almost every available alternative.
A lot has changed in six months.
The Nord Stream 2 project -- bringing gas from Russia to Germany via a second pipeline -- has been halted.
Nuclear power could be making a comeback. At the end of July, Scholz suggested the government might explore extending the lifetime of Germany’s remaining power plants, reversing a decade of policymaking.
Coal has made a return, too. Just two years after the previous government set out ambitious plans to phase out coal-generated electricity by 2038, hard coal-fired power plants across the country are restarting operations in a bid to ensure that Germany can keep the lights on.
Even fracking may be getting a look in, with the government’s coalition partners, the FDP, calling for an end to the 2017 ban.
The government is in an unenviable position. It has committed to a future of net zero emissions, but the current energy crunch has ushered in a present where Hanover is shutting off hot water in municipal buildings and Berlin has cut the spotlights on the Brandenburg Gate.
As a result of public concerns about a “gas free Christmas” sales of electric heaters are now climbing (up 35%) and more worrying still, Commerzbank has warned of a "severe recession" if Germany loses its gas supplies completely, and some experts fear rationing will need to be imposed.
The “Energy Trilemma”, as it has come to be known, poses a significant challenge for governments all over the world who are trying to balance cost, sustainability, and security.
Earlier in the year the economic and climate minister Robert Habeck went on a world tour, signing Germany up to a series of green and blue hydrogen deals. The government is aiming to boost its hydrogen demand to up to 3m/t per year by 2030, but 2030 is a long way away, and even as shipments from the UAE to Germany are anticipated to begin this year, that won’t do much to stave off the crisis. Deals may happen overnight, but renewable projects take much longer to be completed. Rome wasn’t built in a day, and a net zero Germany will take many years to become a reality.
A return to coal may provide some respite, but any prolonged usage will be fundamentally counter to Germany’s long-term goals. Instead, the government must learn to hit two flies with one swat and keep the lights on without burning down the house.
In this context, the government’s pivot to LNG, in line with much of Europe, is a sensible one. Cleaner than oil and coal, it is a costly, but ultimately practical solution not only to Germany’s short-term problems but some of its longer-term ones too. Investing in increased LNG capacity and ensuring the country’s first terminal in Wilhelmshaven is built and ready as soon as possible will be vital. The issue is, gas remains popular and the price is being driven up – so LNG can only be part of the solution. What Germany really needs now is diversification.
Last month, the cabinet approved a £47bn investment plan to boost the country’s energy efficiency. This is part of a wider £148bn climate and transformation fund, and that fund may need to grow considerably if Germany is to develop a diversified energy system. The chancellor’s plan to explore any and all potential energy avenues could be perceived as lacking in direction, but it merely reflects the fact that Germany needs to replace one big supplier with many small alternatives.
Germany is finally having the conversations, with the industry, and government partners, that we can now see should have happened many years ago.
Fortunately, it is the season of conversations and industry conferences are ramping up. ADIPEC 2022, taking place in October, is likely to draw significant interest from a host of nations in a similar predicament to Germany, long dependent on fossil fuels and now looking to transition fast. The conversations started in Abu Dhabi will be continued in Egypt, at COP27, which is expected to serve as another defining moment in the fight against climate change.
It has been a tumultuous time for Germany, and things are likely to get much worse before they get better, but the steps the government is taking are the right kind. A diversified supply, capable of meeting our energy needs now without compromising our climate goals – it's a tricky prospect to pull off, but failure is not an option.
Thomas Matussek is a former diplomat, serving as Germany's ambassador to the UK, the UN and India and as chief of staff to two German foreign ministers.