The European nation has managed to reduce its reliance on Russia
Much has been made in the media about Germany’s impending gas crisis this winter. Following the announcement by Russia’s majority state-owned energy giant Gazprom that an “oil leakage” threatened the safety of its Nord Stream 1 pipeline, the major artery supplying natural gas to Germany, there are now concerns that Germans won’t be able to heat their homes.
But these worries of a heightened energy crisis are overblown. Germany has come better prepared for winter than the headlines suggest.
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To sustain itself this winter, Europe’s largest gas import-heavy economy needed to reach above-average levels of gas storage, then maintain a continual flow of imports — while reducing dependence on Putin’s prime exports. It succeeded. After aiming for 75% storage levels by September, German Economy Minister Robert Habeck revealed that Germany reached its set targets, ahead of schedule. And this month, the European powerhouse achieved its October target of 84.26% gas fill level, according to the latest data from Germany’s Federal Network Agency.
As a political bonus, Germany also managed to reduce its reliance on Russia, with Reuters reporting how the country’s natural gas imports fell from 55% last year, to 26% this June, to merely 9.5% this August. And despite decreased gas outpours from the Nord Stream I pipeline, which drove the recent plunge in Russian dependency, Germany’s total gas imports have remained elevated. Taking Putin’s place was Norway and the Netherlands, making up around 60% of Germany’s natural gas inflows.
Storage has been assured, but the maximum quantity of gas able to be withdrawn from storage facilities could be insufficient to meet the needs of consumers in a harsh winter. Germany (and other import-heavy European countries) must still collectively scramble for future gas flows, a formidable struggle in an already tight global market.
Before a well-stocked France is capable of sending extra liquified natural gas (LNG) to Germany in the future, two of four floating LNG terminals that the German government has leased will come online. As for other sources of energy, renewables will try to take a further chunk out of Germany’s dominant lignite consumption, while negative sentiment around nuclear may start to reverse if an extreme cold snap calls for it.
But whatever happens, Germany will experience higher gas costs for longer. Citizens face the brunt of record energy prices, which have soared more than four times since last year, before peaking only recently. With many Germans incapable of affording such exorbitant energy bills, large-scale state intervention appears likely. In fact, it’s already underway. The G7’s latest announcement of price caps and windfall taxes on energy companies has kicked off proceedings.
This is a significant moment in European politics. Whether or not everyone agrees with these policies, it is noteworthy that even European Commission president Ursula von der Leyen said Brussels was working on “emergency intervention” as well as structural reforms to the power market, which may lead to cheaper renewable energy to help set electricity prices. The old consensus of letting the market ‘do its thing’ is over, as the energy crisis continues to remake European politics.