Germany’s economic engine has long been powered by affordable Russian energy. Now the largest European economy has to carry out the biggest restructuring since Germany was reunified.
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At the same time that Germany must free itself from its dependence on Russian gas and oil, the green change, called Energiewende, is underway.
Fossil fuels and nuclear energy must be replaced by clean and renewable energy.
It was difficult to implement before Vladimir Putin invaded Ukraine. It became much more difficult after the invasion.
A combination of several factors has led to the highest price increase in the past 40 years.
Inflation in Germany is fueled by a severe shortage of energy in what normally serves as the engine of the European economy.
–Dependence on Russian energy is Germany’s Achilles heel.
It will be painful and costly for the Germans to do without it. The supply of Russian gas has already been significantly reduced. And the EU is phasing out Russian oil.
Federal Chancellor Olaf Scholz has pledged to bring about a green change. Now it will happen at a time of severe energy shortage. He has to be aggressive in climate policy, while defending jobs in German industry at the same time.
For all of this to go well, a normal family must reduce their gas consumption by 20% this winter.
Gas is the most important source for heating German homes. Scholz has to convince the Germans that they have to lower the temperature.
It must also reject expectations that clean energy will quickly replace fossil fuels.
To replenish gas reserves for the winter, authorities will reopen a coal-fired power plant near Hanover at the end of August. The Heyden plant was opened in 1987 and is among the largest in Germany. Another coal-fired power plant in Hohenhameln reopened in July.
Right now Germany cannot help but burn coal, which is the most polluting of all forms of energy.
The German government is keen to emphasize that these are temporary solutions.
According to the plan, the Heyden plant will only be in operation until April 2023. In a few years, the last coal plants will be closed. Coal must go if Germany is to achieve ambitious climate goals.
That is why Scholz is looking for new and cleaner energy sources all over the world.
This week he met with Prime Minister Justin Trudeau in Canada to sign an agreement on German imports of green hydrogen. The first deliveries will arrive no earlier than three years.
Norway and the Netherlands have increased pipeline transfers to Germany.
New terminals are being built for liquefied gas (LNG) from other gas exporting countries. But it will take more than a winter to replace Russian gas and oil.
–Previously, 50 to 75 percent of Germany’s gas imports came from Russia. It is now reduced to 35 percent.
If gas supplies from Russia stop completely, it is estimated that it will only take six weeks before there is too little gas for Germany’s needs. It will particularly affect energy-intensive industry.
Putin’s war against Ukraine has triggered reactions and counter-reactions.
Germany and the EU have imposed tough economic sanctions against the Kremlin. Putin has overtaken Europe by drastically reducing gas exports.
The gigantic new Nord Stream 2 project on the Baltic Sea, which was supposed to bring Russian gas directly to Germany, will not be commissioned.
It has become politically impossible in Germany. This summer, Russia temporarily interrupted, or significantly reduced, the supply of gas through the Nord Stream 1 pipeline.
–Today Germany is criticized for its close trade relations with Russia. Sometimes it was a complicated relationship that wasn’t just about finances.
51 years ago, then Chancellor Willy Brandt received the Nobel Peace Prize for his “Ostpolitik”, or Eastern policy. Brandt was awarded for promoting detente between East and West in a divided Europe.
Brandt used trade to promote political goals in relation to the Soviet Union and the GDR. The first Russian pipeline to Germany was opened in 1973. Since then, Germany has traded more with Russia than with any other Western country. It was developed in another era, with a lower voltage level than today.
However, long before the war in Ukraine, many in Berlin realized that dependence on Russian energy had become problematic.
The leader of the Greens, Annalena Baerbock, has become foreign minister in a new liberal and red-green government. You have argued for a long time against Nord Stream 2 because it would make Germany even more dependent on Russian gas.
There is no reason to doubt Germany’s solidarity with Ukraine.
This week, Germany announced a new arms package to Ukraine worth nearly five billion crowns.
Germany trains Ukrainian soldiers and financially supports Ukraine. On the Ukrainian National Day, Olaf Scholz promised German support “as long as it is needed”.
But it is also clear that the ripple effects of Vladimir Putin’s war are one of the reasons Germany is struggling economically.
Part of this is also due to the after-effects of the pandemic, problems with global supply chains and reduced demand in important export markets.
Friedrich Merz, leader of the main opposition party, Christian Democracy, says the country could face the worst economic crisis since the Federal Republic of Germany was founded. The International Monetary Fund (IMF) believes that economic growth in Germany next year will be a scant 0.8%.
It is true that the German economy did not fall in the second quarter, as many expected. But the growth was only 0.1%. Inflation appears to have reached a tentative peak in May, when it was 7.9 percent.
But winter can be harsh.
Inflation can bite at an even higher level. Without a stable energy supply, German industry will have major problems. It is cold in German homes and workplaces.
Scholz’s main task is to replace Russian energy and implement the Energiewende.
Then it almost needs a new Wirtschaftswunder, an economic miracle, similar to the one that brought democratic Germany to its feet in the 1950s.
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