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Trump, NATO Summit Exposed Germany’s Energy Problem

Jude Clemente, Forbes

The Germany, Russia + Putin, Trump, natural gas, and pipeline fiasco at the NATO summit has got all of us thinking.

For decades now, the Russian bear has continually been sinking its mighty energy claws into Europe and Germany. Despite long promising to “get off Russian energy,” Gazprom sales to Europe hit an all time record last year, and Europe is still the largest buyer of Russian oil.

The row at NATO centered on building and financing the $11 billion Nord Stream 2 pipeline, a planned gas route under the Baltic Sea more directly linking Russia and Germany that has divided the West for many years now. Along with some European nations, both President GW Bush and President Obama were against the project, knowing that it riskily ups Europe’s dependence even more on Russia and poses national security threats to the Western allies. Yet, others claim the pipeline is critical to more freely bringing gas into the continent. Germany imports more than 80% of its gas and Russia provides about half of the imports.

But, I want to focus on Germany’s energy situation here, a predicament of its own making. It was all supposed to be so different. Backed by its ambitious Energiewende“energy transition” plan and the Kyoto Protocol, the country has invested heavily for decades now to not just “get off” Russian energy but to get away from fossil fuels altogether. The reality is that this isn’t coming close to happening. For example, wind and solar still supply just 3% of Germany’s energy, compared to to a whopping 79% for fossil fuel (see Figure). As for power, which accounts for less than half of all energy consumed but is the only energy market that wind and solar compete in, even though “Germany has spent $200 billion over the past two decades to promote cleaner sources of electricity,” wind and solar supply just 18% of electricity, compared to 43% for coal – mind-blowing because we were told that coal would “go away the fastest.”

Germany is still overwhelmingly fossil fuel-based.DATA SOURCE: IEA Source: IEA

Germany’s need for even more Russian energy – which the Trump administration isn’t alone in calling a threat to the NATO alliance – is indicative of the country’s energy failures.  The blind obsession with renewable energy explains why Germany has been paying over $26 billion per year for electricity that has a wholesale market value of just $5 billion. The results for families are devastating. Home electricity rates in Germany average around 40 cents per KWh, compared to 13 cents in the U.S. The upside appears non-existent: “Germany to miss 2020 greenhouse gas emissions target.” The phase-out of non-carbon nuclear will make Germany’s climate ambitious far tougher.

In stark contrast, in the fight against climate change, the U.S. is doing just fine thank you. We’ve been using vast amounts of natural gas to slash CO2 emissions faster than any nation: “Thanks to Natural Gas, U.S. CO2 Emissions Lowest Since 1985.” So we Americans couldn’t help but laugh last summer when German Chancellor Angela Merkel read U.S. President Trump the riot act for pulling out of the Paris climate accord.

But yes indeed, Germany is wise to seek more natural gas, and fortunately there’s great room to grow. Gas supplies just 13% of the country’s power, well below the 28-30% OECD average. But, the Trump administration’s point is that, instead of locking in decades of buying more gas off sanctioned-Russia with pipelines, Germany and Europe should be looking for more infrastructure to transport and share gas country-to-country within the continent – an ongoing problem for a group of nations seemingly becoming more divided. Nord Stream 2 doesn’t help Europe’s crucially needed diversity of supply.

To illustrate, LNG import terminals in the north, south, east, and west lack accompanying midstream to ship supplies to other parts of Europe. Not just lowering reliance on Vladimir Putin, this build-out to utilize cleaner natural gas is essential for a “climate leader” that is continually falling behind: “Every European Union Country Is Failing to Meet Their Climate Change Commitments.”

Germany’s goal to reduce greenhouse gas emissions by 80% by 2050 versus 1990 is not just ambitious but highly expensive: “up to 2.3 trillion euros additionally have to be invested in order to reach the long-term targets.” But perspective is required on the purported benefits. Germany’s CO2 emissions are just 2% of the global total, so even reaching climate goals “would have no perceptible theoretical effect on global temperature.” Climate change is by definition a GLOBAL issue, so the notion of individual countries claiming climate benefits for reducing their own CO2 emissions must be seen for exactly what it is: like, totally bogus dude.

Indeed, the global collective is what matters, and there’s more bad news there: “The Paris Climate Accords Are Looking More and More Like Fantasy.”

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