Germany says it has no good alternatives to Russian energy — but not everyone is convinced

Source: CNBC

“We’re now on alert stage two,” said German Ambassador to Canada Sabine Sparwasser. “People are asked to change heating systems, people are asked to cut down on their consumption. And our energy ministry even said you can cut down on the shower time.”

Last month, Russia reduced the flow of gas through the Nord Stream One pipeline by 60 per cent. Right now, the flow is shut off completely for a maintenance period that ostensibly ends on July 21.

A week ago, the government of Prime Minister Justin Trudeau confirmed that it would be returning a set of turbines used in the pipeline — which were in Canada for repairs — back to Germany, despite the fact that they fall under sanctions imposed on Russia in response to its brutal war on Ukraine.

In theory, once the Russians get their turbines back, they’ll restore normal gas flow, allowing Germany and other European countries to fill their storage tanks for winter.

But German officials admit that’s far from certain.

“In many experts’ opinions, it’s a pretext,” said Sparwasser. “It’s very hard to say what to expect.”

If normal flow doesn’t resume, Germany will have to ration.

“To impose a stage three of a gas emergency would mean that the government would have to take measures and make choices,” said Sparwasser. “Governments would want it to go to private households first. But at the same time, industry is also sort of the backbone of German prosperity and you don’t want industry to suffer significantly.

“So there are a lot of difficult choices and we hope it doesn’t come to that.”

A ‘grievous mistake’

German leaders have admitted that the bind Germany finds itself in is largely self-inflicted. The choice to make the country dependent on Russian energy was a “grievous mistake,” said Germany’s Economy Minister Robert Habeck.

Despite repeated warnings from allies, German politicians forged ahead with their Russian business partners, loading the gun the Kremlin now holds to Germany’s head.

The ruling Social Democrats met this week to consider expelling former chancellor Gerhard Schroeder for his role in hooking Germany up to Russia, which won him lucrative seats on the boards of Russian energy companies.

But German politicians also have insisted those mistakes are in the past, and that today the country is doing all it can to free itself from its Russian cage.

“We are building out renewable energy at extraordinary speed,” said Sparwasser. “And Germany is importing LNG (liquid natural gas) as much as we can.

“We are building, and again at extraordinary speed, we will have two LNG ports. We didn’t have any of them at the beginning of this year and we will have two swimming LNG ports on the German coast by the end of the year, hopefully.”

Sparwasser said Germany has asked countries such as the U.S., Norway and Qatar to increase energy deliveries.

But not everyone is convinced that Germany has really pulled out all the stops to break its dependence on Russia.

The counter-offer, rejected

“There are alternatives for Germany to be able to get gas,” said Paul Grod of the Ukrainian Canadian Congress.

“The gas that they need is very easily accessible through the Ukrainian pipeline, which for some unknown reason they refused to utilize. Instead, they are falling prey to Russia’s blackmail.”

Ukrainian officials did not merely oppose Canada’s decision to waive the sanctions on the Nord Stream turbines. They also offered Canada and Germany an alternative — the Sudzha pipeline that enters Ukraine’s northern Sumy region from Russia and runs to the Czech border.

Despite heavy fighting around Sumy, that pipeline continues to carry Russian gas. Gazprom, the Russian majority state-owned multinational energy corporation, has booked and paid for transmission of 109 million cubic meters per day on the pipeline but is currently using less than half of that capacity.

The Ukrainians say Sudzha has an unused capacity of 202 million cubic meters per day, or more than the entire Nord Stream One pipeline, and they’ve offered to put it at Germany’s disposal. But both Canada and Germany have rejected the offer.

“Unfortunately, the answers that we received from both the Canadian government and the German government are not sufficient or not satisfactory to be able to understand why they’re not using that very realistic and reliable alternative,” said Grod.

Either way, the fuel is coming from Russia

Sparwasser said that the International Energy Agency has told Germany that Sudzha doesn’t have the capacity. (The IEA’s advice on the matter has not been made public.) She also said Germany doesn’t see the point of the Ukrainian proposal.

“I would like to point out that whether we receive it through Nord Stream One or whether we receive it through Ukrainian pipelines, we’re buying gas from Russia,” she said.

“Why would it make more sense to start on a new contract with Russia buying from them through this other pipeline when we have Nord Stream One?”

Ukrainians see a number of reasons. First, using Sudzha would not require Canada to set the noxious precedent of waiving sanctions.

WATCH: Trudeau under fire over decision to return turbines to Germany

The Ukrainians also argue that if European countries receive their gas through the Sudzha pipeline, Russia would be less likely to close it down.

“Russia is trying to wean the rest of Europe off of the Ukrainian pipeline so that they can continue to wage economic war against Ukraine,” said Grod. “If gas is flowing through Ukraine to supply Germany, then that means that gas has to flow through Ukraine. That means Ukraine has the gas that it needs this winter.

“This winter, when Russia decides to turn the gas off and there’s no other European countries that are reliant on that, Russia will have its way with Ukraine. And that’s why it’s really important for Ukraine’s energy security for Germany to be buying gas through Ukraine’s pipeline.”

A hard pill to swallow

Adding bitterness to the dispute are questions about German claims that they are really doing all they can to reduce their dependence on Russia.

One pill that Ukraine’s supporters find particularly hard to swallow is the fact that — as they plead energy poverty to Canada — German politicians are voluntarily taking more than 13 per cent of their country’s electrical generating capacity offline.

The ruling Greens and Social Democrats pledged to shut down Germany’s nuclear grid following the Fukushima disaster in 2011. Three plants were mothballed on December 31, 2021. When Russia invaded Ukraine in February, the German government said it would revisit the decision — but then voted last week to keep those plants closed and to shutter the three remaining nuclear plants on December 31, just as the cold weather begins in earnest.

A RWE AG nuclear power plant in Lingen, Germany on Friday, March 18, 2022. (Martin Meissner/Associated Press)

Sparwasser acknowledged this has been tough to explain. “Everybody says, ‘Well, you still have three nuclear plants and they’re supposed to be phased out by the end of the year. Why don’t you keep them on?” she said.

It’s not so easy, she added.

“Continuing the life of a nuclear plant is not trivial,” Sparwasser said. Obtaining fuel is an issue and “we have not done any kind of security measures and testing in those nuclear plants because they were supposed to be phased out,” she added.

“So to do these tests and to do all of that is extraordinarily costly and will take time.”

Turning gas into watts

Canada’s Natural Resources Minister Jonathan Wilkinson came to Germany’s defence on the nuclear issue, first saying it was an internal matter for Germany, and then saying nuclear power would have no bearing on the natural gas situation.

“From a technical perspective, nuclear energy generates electricity,” Wilkinson told CBC’s Power and Politics. “Natural gas is actually used in industrial process applications and for home heating. They are not equivalent and to somehow suggest that starting a nuclear reactor solves your gas problem is just factually wrong.”

WATCH: Return of turbines ‘not a gamble,’ says Wilkinson

But it was Wilkinson himself who was incorrect. In fact, Germany burns large amounts of natural gas to produce electricity — over 50 terawatt/hours of it last year, more than Ontario produced from either nuclear or hydro.

That’s why German energy-saving measures meant to conserve gas include dimming streetlights, which run on electricity.

Keeping the nuclear plants running has the potential to displace the need for Russian gas. So why close them?

A matter of will

Mark Hibbs is a Berlin-based senior fellow with the Carnegie Endowment who has watched German energy policy for many years.

“The Greens have a fundamental issue of identity politics having to do with their opposition to nuclear power. They carry that into the governments that they joined as coalition partners,” said Hibbs.

“Unlike in some other jurisdictions worldwide, the Germans have always had parties in or close to power that were fundamentally opposed to nuclear power generation.”

Hibbs said the German nuclear industry has reasons of its own to collaborate in its undoing.

“Important utility companies in Germany that generate nuclear power also generate electricity with lignite and coal,” he said. “So on the popular front, these companies were not prepared to aggressively defend the advantages in fighting carbon emissions from nuclear because they themselves were generating electricity using fossil fuels.

“They were well compensated for the loss of their assets and they were given enough time, ten years or more, to prepare for a future in which they would be generating power that was not based on nuclear energy. So they have, in fact, adjusted their business plans and investments accordingly during the last ten years.”

It all comes down to a question of “political will,” said Hibbs.

“The reasons that have been brought forth to suggest that this would not be possible — for example, insufficient uranium, fuel or nuclear safety issues having to do with extending the lifetime of the reactor for a small number of years — are basically a sideshow,” he said. “If the industry and the political elites of the country decided between now and the beginning of the fourth quarter to continue operating these reactors, they could do it.”

Nuclear energy alone would not solve Germany’s Russian gas problem in the short term, but the spectacle of Germany giving itself the luxury of closing perfectly viable power plants while sending billions of dollars to fuel Russia’s war also puts strains on its relationships with allies.

NIMBYs clog the gears of change

Hibbs said that Germany’s growth in renewables, once admirable, has recently “had difficulties with political acceptance. They’ve had difficulties in technical capacity, expertise, political support. And as a consequence, the expansion of renewables in Germany has slowed to a crawl.”

Efforts to build new capacity and transmission lines have been bedevilled by Germany’s decentralized federal structure and the fact that its political culture is “very, very sensitive to equity decision-making,” said Hibbs.

“NIMBYism is clearly a problem here.”

Some Ukrainians say there’s also a question of backbone. Did Germany really have to blink first? Could it have stared down the Russians — who, after all, have to sell their gas to someone?

India and China may be able to absorb Russian oil, but gas is not so simple.

A background document prepared by Ukraine’s Ministry of Energy explains Russia’s difficulty: “Gazprom operates 73 bcm of storages in Russia and can place nearly 1.3 bcm of gas in storages in FSU (former Soviet allied) countries.

“Gazprom has very limited options to use more gas inside Russia or to convert it into LNG and ship elsewhere. Its export pipeline to China is not connected to the fields that supply Europe. Therefore, the gas cannot be redirected there …”

“… Gazprom will run out of storage space in August.”

Once Russia has no more storage capacity, it will have to either resume deliveries or cap its wells, say the Ukrainians, who argue that Germany holds more cards than it thinks it does.

And they can point to a recent example of another country that stood up to pipeline blackmail.

Recently, after Kazakhstan’s President Kassym-Jomart Tokayev publicly disagreed with Russian President Vladimir Putin and said his country would not recognize the breakaway republics of the Donbas, Russia’s state oil company cut off a pipeline essential to Kazakhstan’s economy, citing environmental problems.

But the Kazakh government didn’t blink and instead began talks with western companies about going around Russia via Azerbaijan.

Russia reversed course this week, allowing the pipeline to reopen and slapping the Kazakhs with a face-saving fine of $3,250.

Source: CNBC