Germany Surrenders: Effectively Admits Energiewende Was A Failure

Germany is helping to build a LNG terminal to bring in Appalachian gas and correct for the failure of its Energiewende, which led to more coal and emissions.

The U.S. predominance in energy production is reshaping the world’s geopolitical situation, enabling the U.S. to strengthen economic ties with European countries. The combination of horizontal drilling and hydraulic fracturing has not just been good for American jobs and energy prices, it has become a major foreign policy tool that increases in utility as U.S. production grows.

One consequence of U.S. energy production is that Germany has decided to co-finance the construction of a €500 million ($576 million) liquefied natural gas (LNG) shipping terminal in northern Germany. Germany currently gets most of its natural gas by pipeline from Russia. Nord Stream 2, a German-Russian natural gas pipeline, has been proposed to double Russia’s existing gas export capacity to Germany. Russia accounts for over 50 percent of German natural gas imports, with the rest primarily coming from Norway and the Netherlands. The Trump Administration has been lobbying Germany to reduce its dependence on Russian natural gas and to buy U.S. LNG instead. LNG is about 20 percent more expensive than Russian natural gas, but European buyers are showing a willingness to pay a premium to reduce dependence on Russia.

The United States has been supplying LNG to Europe since 2016 and U.S. exports of LNG have skyrocketed since then.

Germany

Original source: Wall Street Journal

Background of German LNG Terminal

Plans to build an LNG terminal were previously stalled because of a lack of government support to make the project economical. On October 16, however, an international consortium filed its first official bid for state support for a terminal in the northern town of Stade, near Hamburg. The German government is fast-tracking the review of the application, planning to make a decision by the end of the year. According to LNG Stade, the facility would be fully operational by 2023 if the funding is granted by the end of the year. It is still unclear, however, how much support Germany will provide and in what form—cash subsidies, loans, credit guarantees, loss protection for investors, or a mixture of the four.

The Stade project is backed by Macquarie Ltd, an Australian financial group; China Harbour Engineering Company Ltd, a Chinese dredging firm; and Dow DuPont Inc. of the United States. The terminal would be based in the 1,400-acre Dow chemical plant on the bank of the Elbe River. The plant’s connection to Germany’s natural gas grid offers synergies that would make building an LNG terminal there about €100 million ($114 million) cheaper than other proposed sites.

The terminal could supply LNG to the port of Hamburg to refuel new ocean liners, some of which are beginning to use natural gas as a consequence of an upcoming agreement affecting maritime emissions that takes effect in 2020. AidaNova is a new luxury cruise ship owned by Carnival Corp. & PLC that will be the first to be powered by LNG, which is in line with the new environmental regulations.

Two competing consortia are expected to file applications for government backing to build an LNG terminal—one in Brunsbüttel, some 30 miles to the north of Stade, and a third in Wilhelmshaven, a nearby marine base that has a deep-sea container ship terminal. German officials said Stade and Brunsbüttel are front-runners due to their advanced stage and location advantages.

Germany is phasing out nuclear power while building wind and solar power in its place and heavily using coal as back-up power. To meet its climate targets, however, it will need to use natural gas, which has a lower carbon content than coal. Production of natural gas in the Netherlands is expected to be phased out within a decade and U.S. LNG could make up for that share of the German gas market.

German lawmakers were told that the terminal will likely not break even for at least 10 years. A 2016 University of Cologne study found that the German terminal would not be viable in the short term since the market’s LNG needs could be covered via an existing terminal in the Netherlands.

Conclusion

Germany is dependent on Russian natural gas for over 50 percent of its natural gas needs. There is a natural gas pipeline that brings the gas to Germany from Russia and a second natural gas pipeline is proposed, which would make Germany even more dependent on Russia for its gas supplies. Despite German lawmakers being told that the LNG terminal would not be economic for a decade, Germany is planning to assist in building at least one LNG facility. The country is currently phasing out nuclear power and using coal as back-up to its wind and solar units. Natural gas has a lower carbon content than coal and would help the country meet its climate targets if it were used instead of coal.

The consequences of increasing U.S. energy production are reshaping the world’s economic and geopolitical systems, and strengthening the influence of the United States in the world.

Editor’s Note: The LNG Germany will be importing will most likely come through Cove Point, which means it’s going to be gas produced in Ohio, Pennsylvania and West Virginia (Maryland and New York have cut themselves out to pander to hasty pudding head fractivists). Think of it, as one NaturalGasNOW commenter brilliantly observed, as “Appalachia Rising.”

It’s also important to note Germany’s reluctant support of LNG is an admission its politically correct but policy stupid Engeriewende scheme has failed in every way. It has not achieved the greenhouse gas emission reductions it was designed to accomplish. It led to more and more use of brown coal, the dirtiest coal there is. It made Germany more dependent on Russia. It was sheer stupidity.

It takes me back four years ago when I had this little debate on the sidewalk outside SUNY Oneonta with a couple of fractivists who apparently moved to the area from the New York City or environs (where energy stupidity is considered dazzling intelligence) and thought Germany was the model for New York to emulate. They were there for a Josh Fox event and 40 or so of us were there to protest.

Germany isn’t fracking yet, of course, but now they’re admitting they’ll need to buy our Appalachian gas if they don’t want to be eaten by the Russian bear. Love it!

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3 thoughts on “Germany Surrenders: Effectively Admits Energiewende Was A Failure

  1. Germany has not surrendered but rather is trying to keep its energy sources diversified. In 5 years when the German terminal might become operational, it can take Russian tankers just like the French terminal near Calais does. Russian ice breaker LNG tankers from the arctic Yamal terminal stop there regularly.

    What makes the IER writer think that Europeans, and Germans in particular, are not sensitive to a 20% price differential or that they are not totally turned off by Trump’s clueless foreign policy? For example, you want to buy gasoline; a station nearby sells it for $3.00/gal. and another one further away, whose owner bad mouths your car and driving, sells it for $3.60/gal; who would you buy from?

    I remember the last time the Russians tried to disrupt the oil and gas industries, natural gas ended up going for $1.80. Most gas companies survived that near death experience barely and some are still selling assets trying to get out of debt. Want to bet they try to flood the market for several months again to make trouble for us?

    Engeriewende is far from a failure. The lack of battery back up means the electric grid has been stretched to its effective limit by the variability of power output, but every renewable kilowatt is one the don’t have to buy with foreign exchange.

    How many tanker deliveries will it take to give the Germans a real alternative to Russian supply? It takes a day to load a tanker, 8-9 days to get to Germany, another day to unload, and 8-9 days back. That works to about 18-20 trips a year per ship. Smaller ships mean more trips and big ones are much more expensive and production is backordered by over two years. Do the math and financing.

    Obviously natural gas is convenient, reliable and abundant. At the minimum it is a compliment f variability of current renewable production or substitute for future wind generation. But that will depend on US, Russian and European foreign and domestic policies and technology. I’d prefer an expansion of US domestic production and use of gas because the same lack of battery backup to make renewables “dispatchable” is lacking here and is 5 to 10 years out at a minimum, if ever.

  2. Tom,
    I watched the video you included at the end of the article. You’re way too kind to the people who were protesting.

    One point made by the woman always throws me. She claimed that gas development destroys the land. Of course, you clearly demonstrated that’s not the case.

    But the overwhelming irony is that EVERYTHING man does to make himself safe in a hostile world is an abuse of nature.

    Every city and town, every road, every factory, every home, every farm, every ranch — everything we do for ourselves comes at the expense of “nature”. We beat “nature” into submission.

    It’s as though the woman believes she exists in perfect harmony with nature, although she undoubtedly lives in a house made from trees and nails, wires, asphalt, insulation and cement, drives a car made of metal and plastic, shops in a supermarket buying food produced on land tilled by machines, and she probably flies for business and/or pleasure.

    She claimed her opposition was based on morality. Astounding. Why does she not protest the construction of every project — houses, apartment buildings, factories, roads, farms, etc. — that tears up the land and hammers it into a condition that suits humans?

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