Strategy rethink in fossil–dependent Germany

8 March 2022

The war in Ukraine is forcing Germany to radically rethink its energy policy, given that the country is heavily dependent on Russian fossil fuels. In a first response, Germany’s government put the contentious Nord Stream 2 pipeline project on hold, announced the creation of strategic coal and gas reserves, committed itself to building terminals for the import of LNG, and agreed to support the ejection of Russian banks from the SWIFT banking payments system. The government has also undertaken to speed up the shift to renewables in a bid to become more independent of energy imports.

Dependence on Russian fuel must be quickly reduced in Germany, even though it is likely to cost the country a considerable ‘insurance premium’ on energy security, says the head of industry lobby group BDI, Siegfried Russwurm. However, Russwurm says energy supplies from Russia should not be cut entirely in the short-term in order to avoid ‘sanctioning ourselves more than the aggressor.’ Russwurm noted that coal imports could be replaced quickly, whereas the construction of new liquefied natural gas (LNG) terminals would take at least three years. He firmly rejected reopening the debate about Germany’s nuclear exit, arguing that ‘coal is the true elasticity factor.

This view is backed by senior German politicians who reject a full suspension of energy trading with Russia owing to a lack of readily available substitutes for imported oil, gas and coal. Finance minister Christian Lindner of the Free Democrats argued that renouncing Russian energy imports would mean that ‘prices in western Europe and around the world [would] skyrocket due to the expected scarcity.’ He warned supply bottlenecks could be expected by next winter and that it would be necessary to discuss very drastic measures in response.

Foreign minister Annalena Baerbock, a prominent Green, said that a boycott would need be very well prepared, as it would have to last at least several months while Markus Söder, conservative CSU leader and state premier of economic powerhouse Bavaria, warned that an import ban would mean  ‘it could become very cold and expensive’ in Germany. By contrast, Norbert Röttgen, security expert of the conservative CDU, advocated for cutting imports “as much as possible”, writing in the newspaper Tagesspiegel.

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