31 March 2023
Germany’s independence from Russian gas with 2 LNG terminals
Germany signaled a U-turn in key energy policies on Sunday. Thus, floating the possibility of extending the life-spans of coal and even nuclear plants to cut dependency on Russian gas. This is part of a broad political rethink following Moscow’s invasion of Ukraine.
Europe’s top economy has been under pressure from other Western nations to become less dependent on Russian gas. However, the following plans have left it with few options.
- Phase out coal-fired power plants by 2030
- Shut its nuclear power plants by end of 2022
Energy supply measures
In a landmark speech on Sunday, Chancellor Olaf Scholz spelled out a more radical path to; ensure Germany’s ability to meet the rising energy supply. Hence, diversify away from Russian gas, which accounts for half of Germany’s energy needs.
“The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security… We must change course to overcome our dependence on imports from individual energy suppliers,”Olaf Scholz, Chancellor
This will include building two liquefied natural gas (LNG) terminals. Particularly, one in Brunsbuettel and one in Wilhelmshaven, raising its natural gas reserves.
These plans will likely be a boon for Germany’s top utility RWE. Note that it has been backing efforts by the German LNG Terminal. A joint venture of Gasunie, Oiltanking GmbH, and Vopak LNG Holding, to build an LNG terminal in Brunsbuettel.
Separately, the German government has asked RWE’s smaller rival Uniper to revive plans to build an LNG terminal in Wilhelmshaven. Note that, the company scrapped such plans in late 2020.
Uniper was not immediately available for comment and the Economy Ministry declined to comment.
Earlier this week Germany halted the $11 billion Nord Stream 2 Baltic Sea gas pipeline project. This is Europe’s most divisive energy project after Russia formally recognized two breakaway regions in eastern Ukraine.
Russia has since invaded Ukraine, prompting the West to slap further sanctions on Moscow. Thus, making the energy supply issue even more pressing.
The revamp of energy priorities comes alongside a paradigm shift in German foreign and defense policy. Considering that Scholz also announced a dramatic hike in military spending.
Germany last year embarked on an ambitious shift towards solar and wind power.
“A draft law to ensure renewables will account for 100% of Germany’s power supply by 2035 already completed.”Oliver Krischer, member of the Greens
Germany will also increase the volume of natural gas in its storage facilities by 2 billion m3 (bcm) via long-term options. Additionally, it will buy additional natural gas on world markets in coordination with the European Union, Scholz said.
Moreover, Germany has 24 bcm of underground caverns of gas storage, which are currently around 30% full, according to industry group Gas Infrastructure Europe data.
“Germany is also weighing whether to extend the life-span of its remaining nuclear power plants as a way to secure the country’s energy supply.”Robert Habeck, Economy Minister and a member of the Greens
Asked by German broadcaster ARD whether he could imagine allowing nuclear plants to run longer than planned under Germany’s exit plan, which foresees shutting the country’s three remaining plants by the end of 2022.
“It is part of my ministry’s tasks to answer this question … I would not reject it on ideological grounds.”Robert Habeck, Economy Minister and a member of the Greens
Isar 2, Emsland and Neckarwestheim 2 are the last remaining nuclear plants producing power in Germany after the country a decade ago decided to phase out the fuel in the wake of Japan’s Fukushima disaster.
The three plants are under the ownership of German energy firms E.ON, RWE, and EnBW, respectively.
Habeck also said letting coal-fired power plants to run longer than planned was an option, throwing into doubt Germany’s ambitious exit from coal, planned for 2030.
“There are no taboos on deliberations,” Habeck said, adding that it was Germany’s goal to ultimately choose which country will supply its energy.
“Being able to choose also means, in case of doubt, saying goodbye to Russian gas, coal, or oil. And should Russia wilfully cut off this supply, then the decision has of course been made… In that case, they will never be rebuilt. I think the Kremlin knows that, too.”Robert Habeck, Economy Minister and a member of the Greens