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Germany Must Recalibrate Its Energy Transition

Fossil Fuels , Markets & Finance

The German energy transition has relied on Russian natural gas as a bridge fuel, but now geopolitical instability has put Germany on a longer and riskier road to climate neutrality.

Russia’s invasion of Ukraine highlighted many of the contradictions and flaws in Germany’s Energiewende–a term that in German literally means “the energy turnaround”. Overly reliant on Russia for its gas, Germany was attempting to catalyze Wandel durch Handel–change through trade, a perennial principle of German foreign policy. The futility of this attempt put Germany in a tight spot in its asymmetric interdependence with Russia.

In 2011, Russian gas started flowing under the Baltic Sea in the Nord Stream 1 pipeline. It quickly became a wedge issue in the European Union. It reduced Russia’s transit dependence on Ukrainian pipelines, increased its trade policy flexibility and became an enticement for Germany’s political elite, who gladly accepted lucrative positions on the boards of Gazprom and Rosneft, like Gerhard Schroeder, a former chancellor.

Angela Merkel pushed to further increase direct gas imports from Russia by building Nord Stream 2. This decision came in response to strong societal pressure to phase-out nuclear power plants, from which Germany obtained a quarter of its electricity prior to 2011. The German green movement has been historically staunchly anti-nuclear. A nuclear phase-out was a pre-emptive measure for Merkel to benefit from that sentiment in the aftermath of the Fukushima disaster and had legislative roots as far back as 2002.

The sum of these trends came to be known as Energiewende. The German energy transition was built on the assumption of cheap Russian natural gas as a transitionary fuel, which together with lignite coal could fill the gap created by a nuclear phase-out and pave the way for the rising role of wind and solar power. Natural gas accounted for 15.3% of German electricity generation in 2021, and 32% of total gas supply hailed from Russia. Gas is also used in industrial processes and for heating.
Nord Stream 2 could have supplied Germany with additional 55 billion cubic meters of gas per year if not for its certification process being suspended due to Russian aggression.

That overreliance on Russian gas was feared to be a weapon by Russia, discouraging Germany from taking swift action against Russian aggression. Olaf Scholz, a Social Democratic chancellor, admitted his helplessness, opposing an embargo for oil and gas by saying that they are strategic necessities for Germany. There is, however, a possibility for one more turnaround.

A total EU embargo on Russian oil and gas could cost Germany more than 200 billion euros and starve industry and households of electricity and heating. International Energy Agency proposed a ten point plan which outlines ways in which Europe could reduce its reliance on Russian gas supplies by doing things like encouraging thermostat reduction, maximizing power generation from bioenergy, nuclear and deploying new wind and solar projects. LNG supplies could also fill some of the gap. Germany is one of the only major EU countries without an LNG terminal. It could potentially use terminals of other European countries, but the overall capacity is lacking. Berlin gas lift could be mustered by diverting American LNG to Europe, but to fulfill the political commitment, the U.S. industry would have to invest billions into infrastructure to move the additional volume of gas.

Germany’s drive towards gas as a transitionary fuel failed when confronted with a geopolitical quagmire. It put Germany on a longer and riskier road to climate neutrality. The German energy plan was based on an assumption that if interwoven into a network of energy relationships, an authoritarian state will be a peaceful and reliable partner. Putin’s Russia proved this wrong by destroying the European security architecture. More attention should be put to where the energy resources are sourced from. It will become a larger trend in the upcoming years, coinciding with deglobalization.

In retrospect, pushing for an early nuclear phase-out was also a grave mistake. Germany abandoned a clean source of energy and made itself more reliant on Russian gas. Prolonging the operation of three nuclear reactors that remain operational was already ruled out, which is telling of how politically difficult It is to advocate for nuclear energy in Germany, even in the wake of the Russian invasion of Ukraine.

What we all learn from Germany’s example is that in considering a path for energy transition, energy security should not be ignored. On the contrary – it is of paramount concern when faced with a geopolitical crisis. Because the assumptions that we make about globalized world and its energy markets may well turn to ashes.


This insight is a part of our Undergraduate Seminar Fellows’ Student Blog Series. Learn more about the Undergraduate Climate and Energy Seminar.


Michal Wyrebkowski

Undergraduate Seminar Fellow

Michal Wyrebkowski is a first-year student from Poland who intends to major in Economics in the College of Arts and Sciences. Wyrebkowski is also a 2022 Undergraduate Student Fellow.