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UKRAINE

EXPLAINED: How Germany could end its dependence on Russian energy

Russia’s invasion of Ukraine has prompted a fierce debate on how Germany can reduce its longstanding reliance on Russian fossil fuels. Here’s what you need to know.

EXPLAINED: How Germany could end its dependence on Russian energy
Electricity pylons and wind turbines in North Rhine-Westphalia. Photo: picture alliance/dpa | Federico Gambarini

In response to Russian aggression last week, German chancellor Olaf Scholz announced a halt to the Nord Stream 2 project – a pipeline which was set to increase gas imports from Russia to up to 70 percent of Germany’s total deliveries. Although the pipeline was not yet in use, and will therefore not immediately impact on energy supply, it serves as a reminder of Germany’s close ties to Russian energy sources.

READ ALSO: Germany halts controversial Nord Stream 2 pipeline

How dependent is Germany on Russia for its energy supply?

According to the Federal Ministry of Economics and Climate Protection (BMWK), Germany imports 35 percent of its oil, 55 percent of its natural gas and 50 percent of its coal from Russia.

In 2021, Germany imported crude oil and natural gas worth €19.4 billion – an increase of 49.5 percent and accounted for 59 percent of all imports from Russia.

READ ALSO: Germany faces up to problematic dependence on Russian gas

Oil imports are mainly processed in refineries into fuel and diesel, but are also used for heating. Many companies also use oil as a raw material and manufacturing lubricant.

A fuel nozzle in the tank opening of a vehicle at a petrol station. Photo: picture alliance/dpa | Sven Hoppe

Gas is mostly used for heating and electricity generation, though industry – especially steel manufacturers – need natural gas for certain processes, as do fertiliser and plastics manufacturers.

Coal is currently mainly burned in coal-fired power plants to produce electricity.

Will supplies last for the rest of the winter?

As the dependence on Russian energy supply is greatest in the gas sector, energy experts have been concerned for weeks about the level of supply to the German and European gas storage facilities.

But, provided that the winter continues to be relatively mild, Germany is expected to get through it safely. According to Federal Economics Minister Robert Habeck (Greens), this is true even in the event that prices for natural gas continue to rise or Russia reduces or completely cuts off gas supplies.

READ ALSO: Germany can do without Russian gas, says minister

Chairman Timm Kehler of the industry association Zukunft Gas told the German Press Association: “We are observing the current supply situation very closely and can say, at least in the short term, that the gas supply for Germany is secure. Heating customers in particular need not worry because of their particularly protected legal position and diversified gas purchases from other countries.”

According to Minister Habeck, further measures have already been initiated for the next winter of 2022/2023, with owners of gas storage facilities being obliged to fill the storage facilities before the start of winter. The corresponding law to secure gas reserves is also already in preparation and should be passed soon.

But in the long term, the Minister Robert Habeck said that Germany’s “hunger” for gas must be reduced as much as possible and that the German government would present a gas reduction plan “very promptly”.

The Minister of Economy also wants to look for new supply partners for oil. Here, however, the situation is less dramatic because of the national oil reserve, which means that oil supplies are currently sufficient to meet demand for another 90 days. “We are on the safe side with oil,” he said.

Habeck also announced that a similar reserve should now also be created for coal. In 2021, Germany still purchased around 18.5 million tonnes of hard coal.

A return to coal and nuclear power?

The war in Ukraine has also prompted a new debate in Germany about a return to a wider use of coal and nuclear power.

The traffic-light coalition government had planned to phase-out coal use in Germany by 2030. But in light of potential energy shortages due to the conflict with Russia, ministers have been vocalising the possibility of a short-term return to coal.

When asked whether the Greens would now have to postpone a coal phase-out by ZDF on Sunday, foreign minister Annalena Baerbock (Greens) said: “Yes, that is the price we too are paying for this war by Mr Putin.” Germany’s solidarity with Ukraine will “also have a price for us here, economically, financially”, she said.

Earlier on Sunday, Federal Economics Minister Robert Habeck also said that he had not ruled out longer operating times for coal and nuclear power plants in Germany.

A sign reading “Access to the nuclear power plant” stands next to a path leading to the entrance building of the Brokdorf nuclear power plant. Photo: picture alliance/dpa | Christian Charisius

However, Habeck also pointed out that the three nuclear power plant operators Eon, EnBW and RWE have already refused to extend their operating lives. The preparations for the shutdowns are so far advanced that the nuclear power plants can only continue to operate with high safety concerns, he said. Nevertheless, his ministry is looking into it, and is considering extending the operating times of German nuclear power plants and also coal-fired power plants.

Short-term cost increases

Last week, the global stock markets reacted sharply to Russia’s military aggression: from Wednesday to Thursday, a megawatt hour of gas on the market became 43 percent more expensive. The gas price ultimately determines the heating costs and, though tenants will not notice the price increases immediately, in a few months or even next year they are likely to see a spike when the service charges are billed.

But Minister Habeck’s assessment is that prices would “level off again in the medium term with a view to the world market”. They are also looking at a wide range of measures to ease the burden of the price increases on low-income families. 

READ ALSO:

Speeding up a move to renewable energy sources

Although it seems that German energy supplies will survive the next winter, Minister Habeck emphasised that it is now necessary to reduce dependence on all three fossil energy sources – oil, gas and coal – as quickly as possible. “Today at the latest, even those who are ‘not so keen’ on climate protection must realise that independence from as many fossil energy sources as possible is a strategic and a security policy issue”, Habeck said.

READ ALSO: Germany to speed up green energy projects in ‘gigantic’ effort

In the medium and long term, however, the focus is on a significantly faster expansion of green electricity from wind and solar power in Germany, which should above all also dampen prices. Habeck said that he wants to remove existing major obstacles to significantly expanding the number of wind and solar energy sites and that the “sleepiness” in approaching expansion must now be overcome.

Could other countries help out?

At the EU level, there is a solidarity mechanism under which EU countries are supposed to share gas reserves in an emergency, especially to protect households from shortages.

The EU Commission is also currently trying to secure additional supplies of gas and liquefied natural gas (LNG) to the EU. According to official information, talks are underway with Azerbaijan, Egypt, Nigeria and Norway, among others.

READ ALSO: Germany eyes new LNG terminals as alternative to Russian gas

The Japanese government has also pledged to redirect surplus liquefied natural gas supplies destined for Japan to Europe andthe Gulf state of Qatar also wants to give up surplus supplies. The Qatari ambassador in Berlin said the country was in principle prepared to make larger gas deliveries to Germany. Overall, the EU Commission says that the EU is on the safe side this winter even in the event of a complete disruption of Russian gas supplies.

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GERMANY AND UKRAINE

What a Russian victory in Ukraine would mean for Germany

For German residents, there is reason to fear a Russian victory in Ukraine. A new mass exodus of refugees would create bottlenecks in housing, childcare and schools, among other issues.

What a Russian victory in Ukraine would mean for Germany

Recent news from Ukraine has been bleak. The surge in missile and drone attacks on Ukrainian power plants over recent weeks has plunged whole districts of the capital into darkness for hours on end.

Kyiv has outlined a five-point strategy to weather the storm, including electricity rationing, urging help from abroad, receiving more air defence systems, and overhauling the grid.

Ukrainian President Volodymyr Zelensky this week said Ukraine needed “quick” and “cost-effective” repair work ahead of winter.

“We need your equipment and financial support to respond now and maintain normal life,” he told a reconstruction conference in Berlin.

While a plan to use frozen Russian assets for war-torn Ukraine dominates G7 talks in Italy on Thursday, there are voices in Germany – especially among the far-right AfD party – that would rather Germany cut off all its support for Ukraine. But these pro-Russian positions, veiled as arguments for peace, tend to ignore how dramatically a Russian victory in Ukraine would shake Germany.

An investigation by Tagesspiegel looked at what exactly a Russian victory would mean for people living in Germany. Here are the main impacts.

Germany would need to dramatically increase military spending

Andreas Schwarz, the SPD budgeter responsible for the defence budget has warned that if Ukraine lost the war, Germany would be forced to spend even more money on defence in one fell swoop.

Russia would suddenly be at the NATO border in Europe feeling militarily superior.

German defence expert Roderich Kiesewetter suggests that Germany would run out of ammunition after a few days in the event of a direct war. Kiesewetter has called for at least three percent of Germany’s gross domestic product to be invested in armaments.

Germany has made efforts to up its defence spending recently, but it is still unclear if the country will maintain a two percent GDP target for defence spending going forward.

But a sense of urgent need to ramp up Germany’s military defences does seem to be growing. On Wednesday Defence Minister Boris Pistorius announced a plan to bring back conscription to the armed forces.

Recently, former British Armed Forces Minister James Heappey estimated that a Ukrainian defeat would cost the West collectively trillions of dollars.

READ ALSO: Is Germany gearing up to reintroduce compulsory military service?

Pistorius with members of the army

Ukrainian President Volodymyr Zelensky (centre left) and German Defence Minister Boris Pistorius (centre right) stand with Ukrainian and German soldiers during a visit to a military training area in Mecklenburg-Vorpommern, north-eastern Germany, on June 11, 2024. Photo by Jens Büttner / POOL / AFP

Higher prices

Ukraine is one of the largest agricultural exporters in the world and also has stocks of rare earths and critical minerals.

A Russian takeover of the country would likely spell massive price fluctuations for goods like Ukrainian grain – which would spell increased grocery prices in Germany as a start, according to many economic projections.

More war refugees in Europe

Migration researcher Gerald Knaus told the Tagesspiegel that a Russian victory in Ukraine could “turn another ten million people into refugees”.

In parts of eastern Ukraine, such as the metropolis of Kharkiv, Russia has been wearing down peoples’ will to stay with near constant bombardment. 

Hundreds of thousands of people living there regularly go without electricity due to destroyed substations and infrastructure. Kharkiv alone is home to 1.3 million, including 200,000 internally displaced persons.

According to Eurostat, since the beginning of the war, 4.3 million Ukrainians have fled to neighbouring European countries. At 1.27 million, Germany has taken in the majority.

READ ALSO: Two years later, two Berlin residents from Ukraine on how war affects their lives

Germany’s interior ministries don’t expect tensions to ease soon. The Federal Office for Migration (BAMF) continues its efforts to distribute refugees across the country, but there is no doubt that in many places resources are running thin.

Helmut Dedy, Chief Executive of the Association of German Cities has called on federal and state governments to provide more facilities.

Increased pressure on the welfare system

Many refugees from Ukraine, and indeed many refugees broadly, are dependent on state benefits for some period of time after arriving in Germany.

As of January the employment rate among refugees from Ukraine was around 25 percent. In December of last year 710,000 Ukrainians received citizen’s allowance.

Refugees are obliged to apply for a work permit in Germany before they can join the workforce. Additionally they face a language barrier, and many of their professional qualifications may not be immediately recognised.

School and day care spots running thin

Since the outbreak of Russia’s invasion of Ukraine, nearly 220,000 children and young people who have fled the country have enrolled in German educational institutions.

So far German states have managed to handle the situation relatively quietly, but there is reason to believe that further stress on the system would be more than it can take.

A Ukrainian student in a German classroom

A name badge with an Ukrainian name seen in an international class at the Max-Ernst comprehensive school (Gesamtschule) in Cologne. (Photo by Ina FASSBENDER / AFP)

The president of the North Rhine-Westphalian Teachers’ Association suggests that the region he represents is already at its limit.

The German Association of Cities and Towns and the Association of Towns and Municipalities (DStGB) have also identified a shortage of school and day care places, as well as shortages of language courses and staff for integration services.

Germany’s educational system has already shown signs of stress – in the form of teachers’ strikes and school dropouts – before an additional influx of students are added into the mix.

Exacerbating the housing shortage

In response to the initial wave of incoming Ukrainian refugees, a section of the Building Code was enacted which allowed for the construction of new refugee accommodation without a development plan.

In some places, especially in parts of eastern Germany with growing vacancies, the influx of Ukrainians actually helped to stabilise the housing market.

But in cities where a severe shortage of housing has already been growing for years, there is no doubt that any number of incoming residents only adds stress.

Such is not only the case in popular cities like Berlin, Hamburg or Munich. In Mecklenburg-Western Pomerania, for example, the local Ministry of the Interior sees municipalities facing a major challenge in providing housing.

READ ALSO: ‘Tense housing situation’: Why a Berlin renter can’t be evicted for two years

German defence expert Roderich Kiesewetter emphasises that the aforementioned impacts on German life are not yet a foregone conclusion. He told Tagesspiegel that Ukraine could still defend itself and restore its 1991 borders according to international law, “But only if we support them accordingly and stop setting red lines for Ukraine and us”.

With reporting by AFP.

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