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Germany, France and Italy Respond to Gas Crisis: More Coal, More Oil, New Suppliers

Russia’s threats to cut off gas supply to the EU has led countries to seek out unforeseen measures that could jeopardise their climate promises

The Ukraine-Russia war has been ongoing for almost five months, a time-period which has seen mass destruction, civilian deaths, huge displacement, global food shortages, and the significant disruption of the global energy system, driving oil and gas prices to their highest levels in almost a decade.

The Russia-Ukraine War has thus had profound geopolitical implications, forcing many countries to reconsider their energy supplies.

The International Energy Agency reports that Russia’s natural gas exports fuel the European economy, supplying around 40% of the European Union’s natural gas, over 25% of its oil, and half of its coal in 2019, with some countries receiving a higher proportion.

Over the last months, the US, UK and EU countries amongst others have tried to sever energy dependence on Russia, imposing economic sanctions and weaning themselves off Russian fuels, but Russian oil and gas did continue to flow to Western nations, even after Putin himself made this more difficult signing a decree that changed the payment currency for Russian energy into Roubles, alongside other actions.

Despite sanctions, Russia in fact profited greatly, redirecting fuel elsewhere on the global market and gaining from sky-high fuel prices. Nevertheless, the European Commission has released plans to curb Russian gas imports by around two-thirds by the end of the year, by increasing imports of natural gas from the US and Middle East, redirecting gas from Asia, and accelerating the green energy transition.

Currently, however, many EU countries and the UK still remain reliant on Russian oil for about 1/5 of supplies, says ICIS consultancy, even after obtaining more oil and gas from other sources and despite all the sanctions and renewable transition efforts. This is problematic because it means Russia can constrain gas supply to Europe for political motivations. 

Already in June, Russia reduced flows through the Nord Stream 1 pipeline, its main route for shipping gas into western Europe, to 40% of its capacity, driving up gas prices in Europe by 30%. 

Further constraints would have severe impacts on European economies which are already facing crisis, and on the environment as they would force countries to resort to more polluting and available fuels that are in direct confrontation with the environmental targets of reaching net zero emissions. 

Germany, France, and Italy, who have committed to end their support for overseas fossil fuel projects, have now stated that investment in this sector is necessary as a temporary response to the current crisis. 

Speaking to reporters at the G7 summit, German Chancellor Olaf Scholz said that the “future does not lie in gas” but that in the short-term, gas is going to be necessary and that investments in it in the transitional phase “are going to have to be supported.” 

Today, less than a month after the initial reduction to 40% of capacity in mid-June that was blamed on Germany’s Siemens Energy delayed maintenance works, Kremlin-backed Gazprom shut down NS1 entirely for maintenance.

Gazprom’s suspension for maintenance is not unusual and takes place annually, but unlike other years, it has raised fears that Russia is starting a wider squeeze on European gas supplies in response to EU sanctions and that NS1 could perhaps not reopen when scheduled to. German Vice-Chancellor Habeck accordingly said that Russia’s reason for reducing gas supplies is a “strategy” to unsettle people and drive-up prices.

Germany reactivates coal plants: A “climate policy disaster” or a necessary measure for energy security

Impacts of Russian gas disruption are felt particularly acutely in Germany as it relies on Russia for roughly a third of its natural gas and coal and for more than one-third of its oil. 

If Russian gas flow through the Nord Stream 1 doesn’t continue at all after the maintenance break, the economic cost of business disruption could reach 193 billion euros in the second half of 2022.

The EU has rules to prevent and respond to a disruption in gas supplies, where member states must have plans in place for managing supply disruption at three levels of crisis: early warning, alert, and emergency.

After the recent curbing of Nord Stream 1, Germany passed emergency legislation in Parliament to reactivate some of its coal power plants to support electricity generation, along with measures to boost the expansion of renewable energy and increase LNG imports from