Russia restarts Nord Stream 1 pipeline, but Germany's energy woes are far from over

What German Vice Chancellor Robert Habeck called a “nightmare scenario” was averted this week, at least temporarily, when Russian oil company Gazprom resumed sending natural gas to Germany on Thursday via the Nord Stream 1 pipeline following 10 days of maintenance work.

Before the gas resumed flowing at 40% capacity early Thursday, European officials had feared that Moscow would simply decide to keep the spigot closed off as payback for Europe’s opposition to Russia’s war in Ukraine, resulting in catastrophic economic consequences.

Despite the partial resumption, however, the continent’s energy situation remains extremely precarious, especially in Germany.

“Currently, we’re facing a crisis with devastating economic, social and political effects,” Potsdam-based Johan Lilliestam, who leads the Energy Transitions group at Germany’s Institute for Advanced Sustainability Studies, told Yahoo News. If Germany’s gas supply continues to falter, key industries — such as chemical, fertilizer and glass producers — could collapse, Lilliestam said. Consumers are already being slammed with higher energy prices, and he worries that if gas shortages were to continue, countries would be tempted to hoard it, fraying European Union cohesion and damaging the single EU market.

Even if Gazprom’s taps are again open, “the damage is already done,” said Raphael Hanoteaux, senior policy adviser on gas politics at energy think tank E3G, referring to sky-high gas prices and the deep erosion of trust in continuing to rely on Gazprom. What’s more, the knowledge that “Russia can hurt the European economy, especially Germany’s, has convinced Europe to diversify and decrease demand.”

On Wednesday, European Commission President Ursula von der Leyen called on the EU’s 27 member countries to slash energy consumption by 15% between Aug. 1 and next April — and to empower the EU to impose rationing of natural gas.

“Russia is blackmailing us. Russia is using energy as a weapon,” von der Leyen said. She added that “a full cut-off of Russian gas” remains likely. “And that would hit the whole European Union.”

Gazprom’s recent behavior — halting gas to four EU countries and severely reducing flows to eight others — has shattered faith in the Russian government-controlled gas giant that previously supplied 40% of Europe’s gas and 55% of Germany’s. Now the EU priority is kicking its addiction to Gazprom’s gas, even if it takes restarting mothballed coal-fired energy plants and imperiling greenhouse gas emission pledges to do it.

For Germany, the continent’s biggest manufacturer, life without Gazprom gas could prove especially tricky. In recent weeks it has rushed to build its first terminal for liquefied natural gas (LNG), yet has complicated its energy future by simultaneously preparing to decommission its last nuclear power reactors. The Western country most reliant on Russian gas, Germany has been on edge since June, when Gazprom abruptly cut pipeline flows by 60 percent, citing a turbine problem and EU sanctions over the war in Ukraine. In response, officials put the country in phase 2 of its three-stage emergency gas plan, which allowed utilities to charge consumers higher energy prices and cleared the way for the government to use more coal plants.

Amid the ongoing energy insecurity, historic monuments across Germany are no longer lit up at night, street lights are dimmed, and despite a blazing summer heat wave, air-conditioning in public buildings has been set at 80.6 degrees Fahrenheit. Germans have been urged to limit showers to every other day, and to take shorter ones when they do.

German households, half of which rely on natural gas for heating, are being told to brace for a tripling or quadrupling of prices, since reductions have prompted buying of more expensive LNG. Officials are also worried that Germany’s gas storage facilities are only at 65% capacity. In order to power the country through winter, that level will need to be at 90% by November.

“We’re not depleting storages, but the problem is we’re not filling them sufficiently,” said Lilliestam.

Germany’s illusions about Russia as a steadfast energy partner have burst, say analysts. “The German-Russian natural gas relationship will never come back,” Berlin-based Jörg Haas, head of the Heinrich Böll Foundation’s International Politics Division, told Yahoo News. “[Russian President Vladimir] Putin’s war on Ukraine and the power games he keeps playing have eroded the necessary trust.”

The countries’ shared energy history stretches to Soviet times, being at one point, said Haas, “a perfect match” between Germany’s industrialized society, which wanted cheap natural gas, and the Soviet Union, which had gas but lacked the technology to supply it.

During the administration of German Chancellor Gerhard Schröder, that alliance grew even closer.

Days before leaving office in 2005, Schröder approved a 759-mile pipeline from northwest Russia, Nord Stream 1, with German financing. The next week, he was sitting on the Gazprom board of directors. German Vice Chancellor Habeck now calls the German government’s move to boost reliance on Gazprom “a grievous mistake.”

Even while other countries began building LNG terminals, cautioning Berlin that Putin was dangerous, Germany’s dependence on Russian natural gas continued to grow and, in 2011, it moved to quickly phase out nuclear power. In 2018, heeding warnings from climate scientists, it moved to pull the plug on coal.

More warning signs were ignored. When Russia annexed Ukraine’s Crimean Peninsula in 2014, Germany largely looked the other way, approving a second pipeline — Nord Stream 2 — during Angela Merkel’s chancellorship. Scheduled to start pumping this year, plans to certify the second pipeline were dropped after Russia’s February invasion of Ukraine, and the Swiss-registered, Russian-owned company behind it, hit by sanctions, went bankrupt.

“Poland and the Baltic states kept warning Germany, advising them not to do these things with Russia because they’re not reliable,” Phuc-Vinh Nguyen, a research fellow at the Paris-based Jacques Delors Energy Center, told Yahoo News. “But German governments formed a partnership with Putin relying on cheap Russian gas to build a really powerful industry, to heat their homes and to produce electricity.”

Germany believed that trading with Russia would bring greater stability to both countries and it “also convinced the EU about their strategy and managed to get other countries behind it,” Hanoteaux said.

The folly of these moves was laid bare by Russia’s decision to invade Ukraine. When the EU slapped sanctions on Russia, and European countries shipped arms to Ukraine, Gazprom began cutting supplies without warning, citing technical problems they were unable to fix due to sanctions — excuses Berlin doesn’t buy. Last week Gazprom sent force majeure letters to customers, informing them it might not be able to meet contracted orders due to forces beyond its control.

Even though renewables provide nearly half of German electricity, and that amount continues to grow, the country still has a big dependency on gas for heating and industry. To the dismay of the scientific community, the government decided to fill the shortfall using a dozen mothballed coal-fired power plants, a step backward in terms of climate change. The move has been endorsed by the International Energy Agency for the short term, however, and some climate groups believe it won’t be disastrous if they’re used only for 18 months or so.

More alarming to many analysts is Germany’s new interest in building LNG terminals, with at least one already started and another four terminals proposed. “Some proposals and actions do seem to be driven by panic rather than robust assessment of the needs and correct solutions,” Sarah Brown, energy and climate analyst at London-based think tank Ember, told Yahoo News. “What must be avoided is simply replacing one imported fossil fuel dependence with another, such as ‘diversifying’ gas supply by sourcing LNG from other countries.”

Sinking billions into LNG infrastructure could lock Germany into gas dependence for decades or risk the investments becoming stranded assets. “It’s difficult to understand why policymakers would take this gamble,” said Hanoteaux.

“These terminals are necessary to cushion whatever problems lie ahead this winter and next winter, but in the long term they may turn into a problem,” Lilliestam added.

A huge debate has also restarted about shutting down Germany’s remaining three nuclear plants, which currently provide 6% of the country’s electricity but are slated to be decommissioned in December following a years-long campaign by the Green Party. Media reports say there’s a chance that if the government imposed speed limits on the autobahn — another goal of the Greens — the party might lift demands for the plants’ imminent closure.

While he doesn’t support building new nuclear plants, Thorfinn Stainforth, an analyst at the Institute for European Environmental Policy, believes every minute should be squeezed out before shutting existing plants. “The fact that Germany is closing all those nuclear plants is going to turn out to have been a major, major mistake,” he told Yahoo News.

The truth is, however, that the void left by Gazprom won’t be easily filled by renewable sources of energy in the near future.

“It may seem to be good news that we’re getting off Russian gas. But the question is, what are we replacing it with?” said Lilliestam, pointing out that even more wind farms wouldn’t come online in time to help out this winter.

Should Gazprom shut off all gas in the coming months, Germany may find itself begging for help from the very countries that warned it to steer clear of Russia, he added.

Despite the bumps in the road ahead, and what the Economist calls a looming “gastastrophe” for Europe this winter, some believe the EU will come out of this stronger.

“I want to be optimistic about this situation,” said Nguyen. “When it comes to solutions that are good for climate, that are good for energy supply, energy security, and that are also good for the consumers, they all have the same solution: deploying more renewables, renovating houses and increasing efficiency measures. So I’m hoping that we’re going to get on board the train that will accelerate the transition.”