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Shortly before the finish line, federal government support for Nord Stream 2 is on the brink. Aborting the project would be expensive, but the power supply would still be assured.
Shortly before the finish line, Nord Stream 2 can still fail. Around 150 kilometers of the Baltic Sea pipeline with a total length of 1,230 kilometers remains to be built. But after the poison attack on Russian opponent Alexej Navalny, the German government is no longer ruling out a construction freeze. Therefore, the question arises: Can Germany afford to give up on the project?
The central argument of the proponents that Germany depends on the pipeline for energy security reasons does not apply. The gas demand can be met even without Nord Stream 2.
The background: Gas sources in Europe will become increasingly dry in the coming years, so more and more must be imported. Gas is one of the most important fuels for heating in Germany. The main gas suppliers are Russia, Norway and the Netherlands. Meanwhile, domestic production falls continuously.
Germany depends mainly on Russia for its gas supply; According to the German Institute for Economic Research (DIW), the Federal Republic of Germany currently sources about 40 percent of its natural gas from Russia. And with the commissioning of the new pipeline, the dependency may further increase due to the additional capabilities.
There are definitely alternatives. “We don’t need the gas pipeline because of energy security, there is enough infrastructure that can be used,” says DIW energy expert Claudia Kemfert in an interview with ntv.de. According to DIW, the larger decline in domestic production can be offset by increased imports from North Africa and liquefied natural gas (LNG). “The demand for gas can be met through existing gas pipelines in Europe,” Kemfert said. Many LNG terminals in Europe are under-utilized and there is an oversupply of gas in international markets.
“The power supply is assured”
Even Nord Stream 2 assumes that Germany is not dependent on the project. A brochure published last year indicated that the impending import gap could be closed “with liquefied natural gas from around the world or with a Russian pipeline.” “The market will decide the corresponding share of these supply sources.”
According to Kemfert, Germany can even do without Russian natural gas entirely. There is enough gas, said the economist. “If Russia were to turn off the gas tap completely, the energy supply in Germany would still be assured. However, Europe must help some countries in Eastern Europe.”
The price differences are manageable. A study by the University of Cologne commissioned by Nord Stream gives the result: “If Nord Stream 2 were used, the volume-weighted average price of gas in Poland in 2030 would be around five percent below the price of gas that is I would establish without the additional reference path. Therefore, Poland will benefit from Nord Stream 2 to the same extent as Germany. “
Kemfert, an expert in DIW, is more careful with her costing. “It depends,” he says when asked whether liquefied gas imports are cheaper or more expensive than Russian-sourced gas. “The price of natural gas is currently very low overall, which also makes liquefied gas cheap.” Gas pipelines are also often subject to gas price controls. That leaves little flexibility and little reaction to changes in international markets.
Companies have invested billions
So Germany can definitely live with a stop at Nord Stream 2, but you have to accept that gas prices will go up a bit. Additionally, compensation payments may accrue to the companies involved. “That would be a high amount. It would have to be paid when in doubt,” Greens chief Annalena Baerbock said on ZDF. However, she also noted that a number of legal issues related to the operation of the gas pipeline from Russia to Germany had not yet been clarified: “Those who invested there also ran the risk that it was still legally possible is not finally sealed.” Therefore, one should not avoid demolishing Nord Stream 2.
What is certain is that if aborted, investments in the billions, including German companies, would literally sink in the Baltic Sea. In the event of a construction stoppage, the investments of eight billion euros would have to pay off, says Timm Kehler, a member of the board of Zukunft Erdgas, an initiative of the German gas industry. In addition, the costs already accrued for the four billion euro connecting pipelines would have to be paid by the gas customers without being used. Around 120 companies from twelve European countries are directly involved in the construction and operation of the gas pipeline.
Besides the economic dimension, there is also the political dimension. Critics of the project warn of growing dependence on Russia, which under President Vladimir Putin has already used gas as a means of political pressure. Putin had already turned off the gas tap several times in the dispute with Ukraine. Some of the oldest gas pipelines run from Russia through Ukraine and Poland, for which countries charge fees. Russia overlooks the ancient routes with the tubes of the Baltic Sea.
Proponents argue that even during the Cold War, the Soviet Union, which was the system’s opponent at the time, reliably supplied gas and oil. Russia will also guarantee supply, if only because energy sales are Russia’s most important source of income.
A departure from Nord Stream 2 would be a turning point in political relations with Russia. If the federal government withdrew its support for the project, it would not only show a clear advantage against Moscow, but it would also clear up one of the main issues of dispute with the United States. US President Donald Trump is attacking the pipeline with sanctions and wants, among other things, to get Europe to buy more gas from the United States obtained through fracking.
