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Why the German Greens want to kill Nord Stream 2

The controversial Nord Stream 2 pipeline, disliked for geopolitical and climate reasons, is nearly complete. The German Greens, who are riding high in the polls ahead of the federal election, want to stop it. Even if they win this autumn, economics could still triumph over clean energy needs.

Nuclear and coal are set to disappear from the German energy mix, but the role of gas in the country’s Energiewende is a much thornier issue. Discussions will get even livelier if, as the Nord Stream 2 pipeline nears completion, Germany for the first time ever votes for a Green politician to lead the country.

With a fighting chance to succeed Angela Merkel as chancellor of Germany, Green Party leader Annalena Baerbock was one of the most hotly anticipated speakers earlier this month at a conference held by US think tank the Atlantic Council.

Green chancellor candidate Annalene Baerbock holds up a description of the party’s policy programme at a press conference. (Photo by Sean Gallup/Getty Images)

One big question facing the Greens, who whatever the outcome of the election are likely to have a role in a new coalition government, will be the Nord Stream 2 pipeline. They have long opposed it, but construction is almost complete, and while the German Greens have a reputation for centrism and pragmatism, the pipeline appears to be one issue on which they are not going to soften their stance – at least before the election.

“For me we cannot finalise this project,” Baerbock said recently. One concern is that the pipeline, which will carry additional Russian gas under the Baltic Sea to Germany following the existing route of Nord Stream 1, will undermine EU sanctions against Russia. Secondly, Baerbock believes short-term economics should not be the main consideration, as Merkel has suggested. Spending money on modernising the existing pipeline through Ukraine so it can carry non-fossil hydrogen gas in the future would be a better investment, Baerbock has said.

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Stopping the pipeline would be difficult, however. Around 95% of it has already been laid, according to the company building it, with the remaining 149km slated to be built in German and Danish waters soon.

US LNG desires

The Greens are far from alone in their opposition to the pipeline, which has stirred up geopolitical and environmental concerns.

Eastern European countries, backed by Washington, oppose the pipeline because it will make Europe more dependent on Russian gas imports. Russia’s aggressive actions at home and abroad in the past year have increased hostility to the pipeline in western Europe. In January 2021, the European Parliament passed a resolution calling for the pipeline to be blocked in response to the arrest of Russian opposition leader Alexei Navalny. Chancellor Merkel, however, has remained resolutely in favour of its construction.

The US Congress has for years threatened sanctions on companies involved in the pipeline’s construction as a response to Russia’s invasion of Ukraine, and put the first into force last year. A total of 18 companies have been driven away from the project as a result of the sanctions threat, including the Swiss company Allseas.

The Biden administration has affirmed it will support the implementation of those sanctions with US Secretary of State Antony Blinken calling on companies to “immediately abandon work on the pipeline”. At a NATO summit in Brussels in 2018, Donald Trump spent most of his time railing against the pipeline, claiming Germany is already importing 70% of its gas from Russia.

Germany’s dependence on Russian gas is often grossly overstated. Germany imports almost all the gas it consumes, with a third of it coming from Russia, but Norway and the Netherlands each supply roughly the same amount. Russian gas accounts for 23% of German primary energy use. Eastern Europe is far more dependent on Russian gas, and it makes up 39% of overall EU gas imports.

The US motives for wanting to kill the pipeline are not about the climate, but about geopolitics – ostensibly at least. Sanctions are supposed to be a way to pressure Russia to stop invading its neighbours and persecuting regime opponents at home and abroad – but in fact the biggest motivator seems to be economics. The US is keen to start exporting its natural gas boom to Europe in large amounts using shipments of liquified natural gas (LNG) by sea. Russian gas is a competitor to that.

A study comparing the two options was commissioned by Nord Stream 2 in 2017. Carried out by Thinkstep, a German consultancy, the research suggests the use of Russian gas in Europe is better for the climate than US gas. It concluded that natural gas transported from Russia to the EU via pipeline has a lower carbon footprint than LNG deliveries via ships. In the base case scenario, greenhouse gas emissions for LNG imports are 2.4–4.6 times higher than emissions from supplies via Nord Stream 2.

Research company Wood Mackenzie agrees pipeline gas is less emissions-intensive than LNG, but says such comparisons aren’t entirely fair. This is because they factor in the intense liquification process before shipment for LNG, but the equivalent emissions aren’t taken into account for pipelines because they take place after delivery. “With pipeline gas projects, it is relatively rare for CO2 to be removed prior to transportation to market due to cost,” the company said in a recent report. “As such, the contaminating CO2 is then emitted when the natural gas is burnt in the consuming market and therefore is not considered part of the upstream emissions.”

Climate concerns

Climate campaigners who oppose the pipeline have been keen to distance themselves from US efforts to kill it, viewing Washington’s motivations as suspect. In February, the NGO Environmental Action Germany (DUH) published a letter between German Finance Minister Olaf Scholz to former US Treasury Secretary Steve Mnuchin in which the German government appeared to offer the US financial support of up to €1bn ($1.21bn) for building infrastructure to import US LNG in exchange for Washington backing off its efforts to stop Nord Stream 2. DUH lambasted this as a “dirty deal” that would see the worst of both worlds – imports of both dirty Russian gas and dirty American gas.

Campaigners are fighting the pipeline in the courts, saying it will work against the German government’s stated energy transition goals and does environmental damage to the areas it will run through. The pipeline shouldn’t be ditched in favour of US LNG, they say, but in favour of renewables. Last year, DUH took legal action against the German regulator that issued the permit for the pipeline. However, previous attempts by environmentalists to stop the pipeline, such as a Greenpeace challenge at the district court in Saint Petersburg, have been rejected.

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“The pipeline is Europe’s biggest fossil fuel mega-project,” says Colin Roche from the environmental campaign group Friends of the Earth Europe. “It’s simply not justifiable to have another mega fossil fuel project coming on stream” as the world tries to keep global warming below 1.5°C, he says.

However, a spokesperson for the Nord Stream 2 project says the pipeline does fit into Germany’s energy transition plans. “The long-term trends of the European market remain unchanged: EU gas production is expected to halve in the next 15 years,” he says. “European gas demand has been growing by 3% a year from 2014 to 2019. Phasing out more polluting coal and in some states nuclear power will also be compensated in parts with gas, which will be increasingly imported. Replacing the 14% of EU generation in 2019 using coal would save 6% of total EU CO2 annual emissions.”

This “gas as a transition fuel” argument is unpopular with climate campaigners. “Europe already has a vast amount of gas infrastructure, both internally and for import,” says Roche. “There is no need for new EU gas import infrastructure, and that has been demonstrated by studies and admitted by the European Commission.”

Data from the 2021 Europe Gas Tracker Report shows Europe already has a significant gas import overcapacity and projections show gas consumption in the EU will fall from annual demand of approximately 450 billion cubic metres (bcm) today to around 300bcm by 2030. These figures are making investors increasingly cautious about gas projects in Europe. With a carbon price that recently crossed €50 a tonne, renewables are offering a more promising return on investment, even if US and German politicians are still pushing for big gas infrastructure projects.

The European Commission’s trajectory for meeting the EU 2050 net-zero emissions target requires gas use to significantly decline even by 2030. Locking Europe into gas with new infrastructure that needs to recoup investment costs would put the EU off that trajectory. More worrying for investors is the growing concern that the US-Russia battle for the European gas market will create stranded assets.

The problem is that projections for future EU gas demand vary widely. A 2018 paper by the German Institute for Economic Research concluded that the energy consumption forecasts the government has used to justify the need for Nord Stream 2 “significantly overestimate natural gas demand in Germany and Europe” and that there will be no supply gap if the pipeline is not built.

One compromise, suggested by Baerbock, would be to upgrade pipelines so they can in the future transport non-fossil gas such as green hydrogen. The EU’s hydrogen strategy adopted by the Commission last year said that both “renewable hydrogen” (based on electrolysis of water using renewable electricity) and “low-carbon hydrogen” (based on the conversion of natural gas without CO2 emissions) are needed to meet climate change targets, but for the moment Nord Stream is a pipeline made to transport traditional gas.

“Renewable hydrogen will be in short supply for the decades to come as additional renewable power generation is needed to cover existing electricity demand,” says the Nord Stream spokesperson. “This is where the EU’s grid of efficient natural gas pipelines and storage system come in: delivery of the energy input for European low-carbon hydrogen conversion from natural gas.”

For Roche, even Baerbock’s idea that pipelines could be repurposed is suspect. “The supply and demand of hydrogen will be much lower than the current consumption of gas,” he says. “To use all this infrastructure we would need to import hundreds of billions of cubic metres of capacity from Russia. There is no prospect of that scale of truly renewable hydrogen being imported from Russia. We would see rather a future where the EU would generate its own hydrogen from its own energy sources.”

Major existing and proposed Russian natural gas pipelines in Europe. (creative commons license)

Fork in the road

The on-the-ground reality also suggests that the need for gas in the German energy system may be overblown.

Half of households in Germany are heated with gas, and gas covers 30% of industry’s total energy demand. Renewables supply 10% of total energy consumption in Germany, and just under half of electricity. The government is phasing out nuclear energy and coal-fired power generation, and the plan is for gas to make up the gap by supplying significantly more electricity in the medium term. A study published last month by the Institute of Energy Economics at the University of Cologne  concluded that with current supply Germany will be faced with a green electricity gap in 2030 if it relies only on existing infrastructure.

“For a secure energy supply, we also need new gas-fired power plants, as this is the only way to obtain the required controllable power,” says Kerstin Andreae, head of Germany’s influential energy industry association BDEW.

However, BDEW has been issuing the same warning for more than five years. In that time, the new gas supply hasn’t yet arrived and renewables now provide almost 45% of German power consumption. Germany’s electricity interconnections with its neighbours help keep the system running smoothly, and fears about not having enough power and needing more gas fail to stack up, certainly in the longer term.

A study published last year by Frontier Economics, again commissioned by Nord Stream 2, suggests the pipeline will lead, in the short term, to a reduction in gas costs in Germany and in neighbouring countries. This decline should help speed up the phase-out of coal, the study says.

However, in the longer term, any potential benefits start to look less enticing. A study published in February 2021 by environmental think tank E3G found that even if the German power sector were to rapidly switch from coal to gas-generated electricity, Nord Stream 2 would be unnecessary because existing infrastructure plus already-planned LNG terminals could deliver the gas needed in the medium to long term.

Campaigners continue to believe the pipeline’s construction cannot be justified on either security of supply or climate grounds. The sudden idea that the next German chancellor could be a Green has reignited hopes the pipeline could be killed.

“For a long time we have been looking for leaders in Germany to look seriously at the climate impacts of Nord Stream 2,” says Roche. “It will be one of the tests of the new government, whether it can shift away from a Germany reliant on fossil fuels to a truly renewable-energy-based economy.”

Dave Keating

Senior writer Dave Keating is a US journalist and conference moderator covering European affairs from Brussels, with a focus on environment and energy.