Warnings about Germany’s dependency on Russian gas were long ignored. Now the country learns the hard way. Among the many casualties of the Ukraine war is a political one in Germany; the country’s Energiewende (energy transformation), which was launched by Angela Merkel more than a decade ago. Many Germans were immensely proud of this transformation, which was designed to put Germany in the forefront of fighting “climate change”. It involves massive investments in renewables and the end to nuclear power in Germany. However, Putin’s aggression has highlighted just how fatally foolish this strategy is, and how vulnerable this transformation has left Europe’s largest economy. Germany is trapped, and it’s a problem of its own making.
BY PHILIP PLICKERT FOR NATIONAL REVIEW AND THE INTERNATIONAL CHRONICLES
Simultaneously abandoning nuclear power and phasing out coal has left Germany more dependent on Russian natural gas than ever before. More than half of its natural-gas imports come from Gazprom and other Russian companies. This was the natural, if regrettable, outcome of the energy policies championed by Chancellor Angela Merkel and her predecessor Gerhard Schröder.
Germany finds itself now in a situation where it can be taken hostage by Putin. In response to Western sanctions, Moscow has demanded this week that EU countries pay for their energy imports from Russia in rubles — otherwise they would stop by Friday. The EU will not bow to that demand. Brussels claims to have emergency plans if Russian supplies of natural gas stop, but a sudden stop would hurt immensely. German industries claim that several hundred thousand jobs are at stake.
Suddenly, Germans are awakening to the brutal consequences of energy dependency. Some are now asking whether it was a good idea to abandon nuclear. Elon Musk recently called out that policy decision: “It is crazy that Germany is switching off all her nuclear plants,” he said in an interview.
Merkel had slowed down the planned phase-out of Germany’s nuclear power stations introduced by a previous Red-Green government, but in the wake of the disaster at the nuclear power station in Fukushima in 2011, Merkel made a U-turn to appease environmentalist voters ahead of regional elections, arranging for the even faster shutdown of nuclear plants than the plans laid down by her Red-Green predecessors.
Fourteen of Germany’s 17 nuclear plants have been shut down now; the Atomausstieg is almost complete. Nuclear’s share of German electricity generation has fallen from more than 25 percent to a little over 5 percent. At the end of this year, the last three reactors are set to close.
German fans of the Energiewende imagined that the world would see this policy as a shining example and follow suit. However, no one followed. Germany remains an outlier. Undaunted, the Greta-Thunberg-admiring nation (the green lobby in Germany is quite strong) came to accept that it might have been an exception, but it was a positive exception. In 2019, Merkel’s government agreed that coal-fired electricity plants should be phased out. Although Germany has now made a massive investment in renewables, which are heavily subsidized to the tune of more than 25 billion euros per year, these are inherently volatile (the wind does not always blow, and the sun does not always shine). Germany has had to fill its energy gap with imported electricity (some of which, ironically, will have been generated from nuclear or coal-fired sources) and natural gas.
The amount spent on subsidizing renewables, as alluded to above, has been enormous. When the first law approving subsidies for renewables was passed, Jürgen Trittin, the Green minister of the environment at the time, assured consumers that the costs would be “not more than one scoop of ice cream per household per month.” In reality, the subsidy — which is reflected in each consumer’s energy bills — has grown to around 300–400 euros per year per person.
Although the kilowatt-hour prices for solar and wind power have declined considerably, the legacy burden of subsidies is great. According to a study by economists from the University of Düsseldorf, it will total to more than half a trillion euros over the course of 20 years. The price of electricity in Germany for consumers has increased to the highest level of almost all developed nations. There was good reason for the Wall Street Journal to describe Germany’s as “the world’s dumbest energy policy.”
When Donald Trump blasted Germany’s energy policy and growing dependence on Russia’s gas (with, of course, the Nord Stream 2 pipeline in mind) in a speech before the U.N. in 2018, Germany’s foreign secretary Heiko Maas, a Social Democrat, and his team were seen laughing and smirking.
Russia’s war in Ukraine has been a brutal wakeup call. Germany’s new chancellor Olaf Scholz has called it a historical turning point, a Zeitenwende. Scholz promised more resources for Germany’s armed forces which have been miserably underfunded and neglected for decades. This shift was long overdue, and it has come as a shock to some of the more left-wing members of the governing coalition. That said, there may be less to the extra 100 billion euros in military spending proposed by Scholz than at first appeared. A closer look at the small print of the budget reveals that the money will be spread over several years and that Germany might still not reach the 2 percent NATO goal.
For all the talk of a Zeitenwende, Scholz could not commit to stopping Russian energy imports, especially gas. Every month, Berlin continues to pay billions to Kremlin-controlled companies such as Gazprom. Since 2014 (when Putin annexed Crimea), Germany has spent more than 170 billion euros on imported energy products from Russia.
Germany’s dependency on natural gas from Gazprom is so great that a sudden halt in its flow would trigger a deep economic crisis. As far as the oil is concerned, there might be alternative supply sources, but that may well not be the case with natural gas, most of which has been transported via pipelines from Russia. And even if alternative sources of supply can be found, does Germany have the infrastructure to accept it?
Germany is trapped, and it’s a problem of its own making.
Chancellor Gerhard Schröder, Merkel’s predecessor and a close friend of Putin, set the course. In 2005, he signed an agreement with Putin for the construction of Nord Stream 1, a pipeline under the Baltic Sea from Russia to Germany. It entered into operation in 2011. Merkel also misjudged Putin and pushed ahead with the plans for Nord Stream 2 despite warnings and opposition from the U.S. and various Eastern European states.
Since Schröder left office in 2005, he has transformed openly into an agent for Russian oil and gas interests, holding positions at Gazprom and as a member of the board of Rosneft and Gazprom subsidiary Nord Stream 2, making millions from his connections with the Kremlin’s energy giants. His political party, the SPD, for many years turned a blind eye to this and only recently called on him to stop.
A good starting point for sorting out Germany’s energy mess would be to extend the running time of its remaining nuclear plants. The country is not only hostage to Putin’s gas, but also to green ideology. “Atomkraft, nein Danke!” reads the slogan on posters at demonstrations and millions of car stickers seen all around the country since the late 1970s. The repudiation of nuclear energy is central to the political and emotional identity of Germany’s Greens – and not just the Greens. Many German voters, regardless of their political complexion, are hostile to nuclear power.
By contrast, in a number of European countries there are signs of a nuclear renaissance. Reversing an earlier plan to reduce France’s use of nuclear power, President Emmanuel Macron has announced plans for the construction of up to 14 new plants (nuclear power supplies around 70 percent of France’s electricity). In the U.K., Prime Minister Boris Johnson is targeting an increase in nuclear’s share of the U.K.’s energy supply to 25 percent over the longer term. Belgium has recently revised its plan for abandoning nuclear power. Existing plants (which were due to be phased out by 2025) will have their lives extended by ten more years.
In Germany, however, such moves would be taboo for the Greens and the Social Democrats (the government is a coalition between the Social Democrats, the Greens, and the classically liberal FDP). And the FDP is not prepared to break ranks by calling for a revision of the Atomausstieg. Neither is the center-right opposition, the Christian Democrats, Merkel’s party, which is only starting to recover from the electoral disaster they went through last year.
Vice Chancellor Robert Habeck, the Green minister for the economy and the climate, has ruled out extending the operation of the remaining three nuclear plants (which together deliver around 5 percent of Germany’s energy needs) beyond year-end. The association of the operating companies has denied these claims.
Habeck has looked instead for alternative sources of gas, securing a long-term LNG supply agreement from Qatar — a country that his Green party previously lambasted for its poor record on human rights. In addition, the EU has just struck a deal with the U.S. for much-expanded LNG supplies to Europe. Habeck claimed that this deal could make Germany more or less independent from Russian gas by mid 2024.
The Greens would like to abandon fossil fuels altogether at the fastest pace imaginable. They dream of an industrial country completely powered by wind and solar. Several thousand more gigantic wind turbines are to be built across Germany with the effect on the landscape that is easy to imagine. But even with much expanded wind and solar power capacities, energy security is not guaranteed. Given the volatility of wind and solar energy, it means that in an extreme winter, blackouts cannot be ruled out.
Germany’s energy course correction was never going to be easy, but it will be made far more difficult by the longstanding prejudices of those in charge. It appears that some politicians would rather risk a blackout than take the pragmatic course and reconsider nuclear energy.
