Page 4 - EurOil Week 17 2022

EurOil COMMENTARY EurOil

Exploring Germany’s drastic

shift in energy policy

German energy policy is unrecognisable to what it was

before Moscow began its invasion of Ukraine

GERMANY WHEN he took office in December, German to embrace LNG, the government argues, and it
Chancellor Olaf Scholz was expected to follow needs to do so quickly.
closely in the footsteps of his predecessor Angela Germany is not the most gas-intensive econ-
WHAT: Merkel when it came to the country’s energy omy in Europe, although its reliance on the fuel
Germany has embraced policy. But in the wake of Moscow’s invasion of has grown in recent years as nuclear and coal-
LNG as the main means Ukraine, that policy is unrecognisable. fired power plants have been phased out. And
of cutting energy ties with Like Merkel, Scholz was supportive of the its reliance is only set to increase further as
Russia. Nord Stream 2 pipeline, even though the pro- more of these stations are retired over the next
ject was set to increase Germany’s already-sig- few years, especially at times when the coun-
WHY: nificant reliance on Russian energy. But within try’s vast but intermittent renewables capacity
This marks a sharp 24 hours of Russian troops entering the Don- underperforms.
departure to previous bas region, Scholz announced that the pipe- Germany has installed more wind and solar
policy. line’s certification would be halted. It now power generation than any other European
looks increasingly likely that Nord Stream 2 nation. By the end of 2022, it boasted 53.8 GW
WHAT NEXT: will remain nothing more than a hunk of metal of solar and 62 GW of wind capacity. As such,
Germany could replace at the bottom of the Baltic Sea, barring regime the share of renewables in its primary energy mix
as much as 30 bcm per change in Moscow. has expanded from 12.5% in 2015 to 18.2% in
year of Russian gas if it In its place, the government in Berlin has 2020. This rate of growth, though quite a feat, is
develops all three of its lent its support to the construction of several not fast enough to make up for the loss of nuclear
main LNG projects by the LNG terminals. On April 15, it committed €3bn and coal-fired generation, however. Germany
late 2020s. ($3.3bn) of financing for these projects, bypass- has therefore relied on gas to fill the gap, with
ing the usual step of consulting the budget com- the share of that fuel rising from 21% to 25.8%.
mittee of Germany’s parliament. Germany needs The problem is that the vast majority of this gas

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