At 3:00 in the morning on August 31, 2022, gas flowed for the last time through the Nord Stream 1 pipeline. That is when the Russian energy company Gazprom finally turned off the tap. Since then the 1,200-kilometer pipeline has been lying unused and, following an act of sabotage a few weeks later, unusable on the bed of the Baltic Sea. Germany energy policy has gone into alarm mode. Liquefied natural gas terminals are being built at record speed on the German coast to receive the LNG that will soon be arriving from the USA, Algeria, and Qatar. At the same time, the German government is accelerating the expansion of renewables to reduce its dependency on imports as quickly as possible. But will these measures be enough to replace Russian gas? And what might the energy mix look like in the future?
One thing that the current energy crisis has achieved is to reduce German natural gas consumption by 12 percent between January and September, which represents a significant fall for the otherwise slow-moving energy market. The gap in the primary energy supply has been filled primarily by black coal (up 11.9 percent), brown coal (up 8 percent), and mineral oil (up 5.2 percent), according to data from the Working Group on Energy Balances. In the first nine months, renewables also increased by 4.2 percent, which is largely due to windier weather, but change seems literally to be in the air. “Industrial firms, for example automotive industry suppliers, are currently making huge investments in renewables to avoid the cost pressure caused by volatile energy markets,” explains Folker Trepte, energy expert at the auditing and management consultancy company PwC.
Still heavily dependent on gas
But Germany is still reliant on the gas tap. Every day millions of cubic meters of natural gas arrive in the country via pipelines. However, it no longer comes from Russia, but mainly from Norway and the Netherlands. Germany meets 23.6 percent of its primary energy requirements with gas. Only oil (34.8 percent) is more important. The only thing that has really changed is the prices. Instead of 6.7 billion euros, Germany is now spending ten billion euros per month on natural gas, despite the fact that, according to the Federal Statistical Office of Germany, the amount of gas imported halved between January and August.
The short-term replacement for Russian pipeline gas is liquefied natural gas or LNG. On November 15, the first LNG terminal in Wilhelmshaven was completed. It alone will be able to supply 8.5 percent of German gas requirements. In addition, a total of six terminals at four locations are due to come into operation next year. There will be no lack of discharging capacity in the future and bottlenecks in the supply of LNG could soon be a thing of the past. “Countries like Argentina and Mexico could begin supplying LNG. That would increase the amount available,” says Eric Heymann, energy expert at Deutsche Bank Research in Frankfurt am Main. In theory, there is enough LNG in the world. The USA alone could meet the entire European demand for gas, according to estimates by the British magazine The Economist.
However, experts are warning against replacing Russian pipeline gas one-for-one with LNG from the USA. “The carbon footprint would be worse,” says Detlef Stolten, Professor at Forschungszentrum Jülich. In his view, one of the main problems is methane slip. The fracking process used to extract gas from shale rock also releases methane into the atmosphere as a result of leaks and evaporation. The amounts are relatively small, but the greenhouse effect of the gas is 30 times greater than that of carbon dioxide. “Heating our homes with American LNG is as bad for the climate as heating with coal,” says Stolten.
Gas steps in during the “dark doldrums”
Gas is, however, used not only for heating, but also for electricity generation. In Germany, gas-fired power stations produce 12 percent of the electricity. They are primarily fired up when the supply of renewable energy drops because the wind is not blowing and the sun is not shining. The “dark doldrums,” as this phenomenon is sometimes known, mainly occur in the winter months and gas-fired power stations are better at compensating for the shortage of electricity than coal-fired and nuclear power plants, which are too slow to respond. These are more suited to covering the base load.
“We will need more gas-fired power stations in the future,” explains Stolten. There are two reasons for this. Firstly, electricity consumption will increase over the next few years because more people will be driving electric cars or heating their homes with heat pumps. The Institute of Energy Economics at the University of Cologne (EWI) expects an increase of 24 percent by 2030. Secondly, the German government is continuing its phase-out of coal and nuclear energy, while massively expanding renewables. By 2030, 80 percent of the country’s electricity should come from renewable sources, which is double today’s figure, according to the government’s Easter Package. The aim is to reach 100 percent by 2035. All of this could lead to shortages of electricity and these gaps will have to be filled by back-up gas power stations.
Move to biomethane or green hydrogen
However, if the German government has its way, gas-fired power stations will no longer be burning natural gas in the future, but biomethane or green hydrogen instead. It is hoped that hydrogen in particular will enable the energy industry of tomorrow to operate without natural gas and other fossil fuels altogether. The researchers at Forschungszentrum Jülich have proved that this is theoretically possible with the help of a computer model. In their scenario, wind (34 percent), solar (22 percent), and biomass (20 percent) will provide the majority of the primary energy supply, backed up by hydrogen (15 percent). Other sources, such as hydropower and geothermal energy, will contribute 8 percent and, in addition, small amounts of electricity (less than 1 percent) will need to be imported. However, the model is based on sweeping assumptions, such as a 30 percent reduction in energy consumption and large-scale imports of hydrogen. The changeover will not take place quickly, whatever happens. The researchers estimate that the date of the “zero fossil” scenario will be 2045.
Almost all German politicians agree that Germany needs to move away from using gas as quickly as possible. In its working paper entitled “A turbo for renewables,” the center-right CDU party was calling for the move to solar, wind, and biogas even before the parliamentary elections. It also supports more sector coupling and a hydrogen economy. The only disagreement concerned the question of how long nuclear energy should be used for electricity generation. The government has extended the operating period of Germany’s last three nuclear power plants until April 15, 2023, but they will then be finally shut down. By contrast, the CDU is calling for them to continue operating until the end of 2024. Only the right-wing populist AfD party is swimming completely against the tide of energy policy. It wants to repair the Nord Stream 2 gas pipeline and restart old nuclear power stations.
Different ideas within the EU
In the EU, opinions about where our energy should come from in the future differ more widely. Poland, for instance, is planning a more leisurely energy transition. While Germany is intending 80 percent of its electricity to come from green sources by 2030, its coal-rich neighbor is aiming for only 23 percent. In addition, Poland is moving into nuclear energy and plans to build a total of six nuclear power plants by 2043. France will also be relying more heavily on generating electricity using nuclear power and will be constructing six or possibly even eight new reactors. However, the Macron government has almost totally abandoned onshore wind and is giving priority to photovoltaics and offshore wind farms.
The German government has significantly brought forward its planned phase-out of natural gas following the invasion of Ukraine. As early as 2035, in other words in only 13 years’ time, all electricity will be generated without the use of fossil fuels. Most experts believe that this is too ambitious, because it is not possible to move quickly in any areas relating to energy. Eric Heymann, the analyst from Deutsche Bank, speaking about primary energy consumption, says: “Over the last 30 years, the proportion of fossil fuels has fallen by just under 10 percentage points to 78 percent. A complete phase-out in a short time seems unrealistic.”
Folker Trepte, the energy expert from PwC, also believes that it will not be possible to phase out gas completely in the near future. “We still need a conventional reserve,” he says. In the short term, the proportion of coal in the energy mix could even increase, if the last nuclear power plant is really shut down in April. “Only when we stop using brown coal in 2030 will there be more movement in the energy mix, because we will no longer be able to compensate for the lack of gas using coal,” explains Trepte. In order to manage without gas altogether, the electricity grids must first be expanded. “Because of a lack of power line capacity, 5 percent of the renewable energy facilities are already unable to feed their electricity into the grid.”
Too little green hydrogen available
And that is only one of many obstacles. Green hydrogen, for example, is currently only available in very small quantities. Annual global production is 1.2 million metric tons, but experts estimate that Germany alone would need ten times that amount for its economy to become climate-neutral. There is also the question of who will build the new gas-fired power stations, because this is not going to be cost-effective. The greater the contribution made by renewables to the energy mix, the larger the potential gaps that a back-up power plant will have to fill. On a few days it would have to provide huge amounts of electricity, but it would not be needed for the rest of the year. In the current economic situation, this presents a problem. “At some point there will no longer be a business case,” says Heymann.
But Detlef Stolten from Forschungszentrum Jülich believes that all these problems can be solved. However, he does warn that urgent action is needed. “Too little is happening at the moment,” he says. He explains the schedule: if a product needs to be in use by 2045, it must be completed by 2035, which will only work if the development process begins in 2025. That also applies to the phase-out of fossil fuels. We need to start building a hydrogen infrastructure immediately and push ahead with sector coupling. “If the important technologies are not on the market by 2025, it will be difficult to achieve our targets for 2045,” warns Stolten.