A New Era for Germany’s Gas Industry Fuels Climate Fears

Emergency moves to end energy dependence on Russia represent a victory for the gas lobbyโ€™s plans to lock Europeโ€™s biggest economy into the global market for liquefied natural gas, campaigners warn.
Phoebe Cooke headshot - credit Laura King Photography
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Series: Gas Lock-in
A floating LNG terminal crosses the Saronic Gulf in Greece. Credit: Moofushi/Adobe stock

This story is part of a DeSmog series on the influence wielded by the gas lobby in Europe and was developed with the support of Journalismfund.eu

WILHELMSHAVEN, Germany โ€” For 150 years, heavy industry has been the lifeblood of the German port of Wilhelmshaven, a hub for shipbuilding, plastics, coal and steel. Now, the city is at the forefront of the countryโ€™s dash to break its dependence on Russian gas.

On Saturday, a newly built jetty is due to welcome the Norwegian-flagged Hรถegh Esperanza, a 280-metre vessel capable of offloading cargoes of natural gas supercooled into liquid form, then shipped across the ocean in specialised tankers.

The facility is the first of six such floating units slated to berth at various points along Germanyโ€™s coastline over the next year, where liquid gas will be converted back into its gaseous state and fed into the countryโ€™s gas grid. Up to three onshore equivalents will boost import capacity further. This string of new infrastructure will enable the country to buy enough liquefied natural gas (LNG) from producers such as Qatar and the United States to cover up to a third of its present-day needs, officials say.

Uniper, RWE and other big German utilities argue that pivoting to LNG is Germanyโ€™s only viable substitute for Russian pipeline gas, which accounted for more than half the countryโ€™s imports before President Vladimir Putinโ€™s invasion of Ukraine triggered a frantic search for alternatives.

Climate campaigners, however, see the new piers and pipelines as ominous signs that the gas lobby has finally achieved a long-standing goal to lock Germany into the $100 billion global LNG market โ€“ threatening to keep Europeโ€™s biggest economy hooked on fossil fuels for decades to come.

โ€œA lot of new fossil infrastructure is being installed, and environmental and climate experts are very worried that this could go far beyond the infrastructure needed for the short term, and create new fossil lock-ins,โ€ said Nina Katzemich of LobbyControl, a transparency campaign group based in Berlin and Cologne. 

Thatโ€™s potentially very bad news for the climate: The huge amount of methane that leaks during the production, transport and storage of LNG means that the carbon emissions associated with importing the fuel could be up to ten times higher than for the equivalent amount of Russian pipeline gas, researchers say.

Whatโ€™s more, Germany could sidestep the need to build the planned onshore LNG terminals altogether if it took more aggressive steps to curb energy demand by ramping up plans to install more heat pumps in homes, and renovate buildings, according to a new report.

With gas lobbyists holding hundreds of meetings with officials since Russiaโ€™s February 24 invasion of Ukraine, according to DeSmog analysis of official records, campaigners accuse the industry of crowding out discussion of measures to reduce demand for its product โ€“ with disastrous consequences for the climate. 

โ€œWe need to invest more in renewable energy, not lock in infrastructure or exploit other countries for our own โ€˜energy securityโ€™,โ€ said Stefanie Eilers, a campaigner in Wilhelmshaven from the Nature and Biodiversity Conservation Union, an environmental group with more than 500,000 members. โ€œItโ€™s fossil fuel madness.โ€ 

Germany is due to receive its first directly imported LNG at the end of this year. Credit: DeSmog

Hopes Resurrected

The gas lobbyโ€™s project to plug Germany into the global LNG market dates back to at least 2005, when E.ON Ruhrgas โ€“ a subsidiary of gas company E.ON โ€“ first proposed plans for an import terminal in Wilhelmshaven. 

Until last year, Germany relied mostly on plentiful supplies of cheap Russian pipeline gas, as well as importing LNG via France, Spain and the Netherlands. As recently as April, 2021, Uniper, then one of Europeโ€™s biggest buyers of Russian gas, was forced to shelve the latest attempt to open an LNG terminal in Wilhelmshaven, citing a lack of demand. 

Calculations changed dramatically after the invasion of Ukraine. The German government and the gas industry, which has long enjoyed a powerful voice in energy policy, fell into lockstep on the need to rapidly import LNG as Russia restricted gas supplies in response to Western sanctions. The move threatened to cripple Germanyโ€™s economy, which relied on gas for about 27 percent of its total energy consumption in the first half of this year, mostly for heating and industry, according to Clean Energy Wire.  

The Green party, a partner in Germanyโ€™s ruling coalition, which unveiled sweeping measures to boost wind and solar this spring, became a strong LNG advocate. Green politician Robert Habeck, Germanyโ€™s vice-chancellor and minister of economy and climate action, called for new gas import infrastructure at โ€œTesla speedโ€ โ€“ a reference to the rapid rollout of a Gigafactory near Berlin.

Weeks later, Germany released nearly three billion euros to lease four floating LNG import terminals from RWE and Uniper, including the Hรถegh Esperanza at Wilhelmshaven. In May, the government passed legislation to accelerate the deployment by relaxing planning rules. The government has portrayed the LNG terminals as stopgap measures. But licences allowing the infrastructure to operate for up to 20 years have raised fears the terminals are here to stay.

โ€œCompanies had failed to build terminals for years. They never succeeded because they didnโ€™t have a business case,โ€ Constantin Zerger, head of energy and climate protection at Hanover-based nonprofit Environmental Action Germany, told DeSmog. โ€œAfter the war started, they werenโ€™t talking about economic feasibility but about energy security, and at that point the government decided to jump on all the existing plans.โ€ 

After a bleak period for LNG, when a combination of the COVID-19 pandemic, climate concerns and investor jitters had weighed heavily on investment, industry groups on both sides of the Atlantic seized on the Ukraine invasion to revive the industryโ€™s fortunes. 

Gas Infrastructure Europe, the association of European gas infrastructure operators; Eurogas, which represents the wholesale, retail and distribution sectors, and LNG Allies, an industry association in the United States, which is vying with Qatar and Australia to be the worldโ€™s top exporter of the fuel, all issued statements urging the EU to invest in LNG infrastructure.

Canadaโ€™s oil and gas industry also spied opportunities. In January, as tensions between Russia and Ukraine rose, Canadian officials and Calgary-based Pieridae Energy pitched the idea of exporting Canadian LNG during a virtual meeting with German officials, as DeSmog has previously reported. The meeting took place as part of the Canadaโ€“Germany Energy Partnership, established in March 2021 to foster โ€œclean energyโ€ trade opportunities โ€“ including in hydrogen and LNG.

Environmental campaigner Jochen Martin is protesting against new LNG infrastructure in Wilhelmshaven, northern Germany. Credit: Phoebe Cooke

โ€˜Political Decisionโ€™

German utilities, gas network operators and international oil companies were quick to engage with the government as the Ukraine crisis escalated. 

Gas and energy industry representatives met with German officials at least 547 times in the seven months following the invasion, according to responses to a parliamentary written question filed by three Left Party MPs in October and analysed by DeSmog. The meetings included conversations, telephone calls, written exchanges, roundtables and the occasional shared press conference, with executives representing LNG projects planned in Brunsbรผttel, Stade and Lubmin engaging regularly with Habeck and other high-ranking officials. 

Campaigners acknowledged the need for the government to discuss a temporary response to the energy crisis โ€“ but said they feared gas companies had used their extensive access to promote a long-term role for fossil fuels, despite Germanyโ€™s target to reach climate neutrality by 2045. 

โ€œIf political decision-makers are only listening to one side of the story, we can assume that their decisions will also serve these interests, rather than that of the public,โ€ said Sam Beiras, spokesperson at the WeiterSo! Kollectiv, a pressure group seeking to challenge the gas lobbyโ€™s influence in Germany. โ€œItโ€™s a big scandal in our eyes.โ€

The German Association of Energy and Water Industries (BDEW), a major lobby group representing the gas industry, held 71 meetings with Habeck and other officials over the seven-month period. The group is led by managing director Kerstin Andreae, a former Green party member of parliament, who backed the bill to ease planning rules for new LNG terminals.

Uniper, which was nationalised in September after suffering huge losses when Russia restricted gas sales, held 47 meetings with the government, while its previous owner, Finlandโ€™s Fortum, held 14. Uniper told DeSmog the meetings pertained to the governmentโ€™s moves to stabilise the companyโ€™s finances, and its request that the company build and operate the LNG import terminal in Wilhelmshaven, and procure LNG supplies globally.

RWE, which is backing the planned LNG terminal at Brunsbรผttel, was represented in 48 meetings. Last week, U.S. oil company ConocoPhillips and QatarEnergy signed a 15-year deal to provide the company with two million tonnes of LNG annually from 2026. RWE has also struck deals to buy LNG from Abu Dhabiโ€™s state oil company Adnoc.

โ€œIt was a political decision by the federal government to replace pipeline-bound natural gas with LNG,โ€ RWE said in an email to DeSmog. โ€œThe goal was clear: to make Germany less dependent on Russian imports and to create security of supply for industry and private households as quickly as possible.โ€

Markus Krebber, RWEโ€™s chief executive, and Uniper Chief Executive Klaus-Dieter Maubach both held talks with state secretary Jรถrg Kukies on a โ€œcollaborationโ€ with Senegal. Neither company has spoken publicly about pursuing gas plans in Senegal, but reports of a potential gas partnership between the German government and Senegal have met with fierce criticism from climate campaigners. 

German officials also spoke regularly with multinational oil and gas companies in the first months of the war, including with the chief executives of Shell, TotalEnergies and Equinor. These meetings were held on a variety of subjects, including โ€œenergy supplyโ€ and quitting Russian oil, but also on hydrogen.

Companies and groups referenced in this article were approached by DeSmog for comment but had, unless stated otherwise, not responded prior to publication.

โ€˜A Very Long Bridgeโ€™

Germanyโ€™s government has sought to soothe concerns over the potential climate impact of the LNG infrastructure with reassurances that the terminals will be adapted to transition to hydrogen โ€“ which the gas industry portrays as a sustainable fuel.

Complying with the 2015 Paris Agreement to avoid catastrophic climate change implies a complete phaseout of fossil fuels โ€“ including natural gas, said Susanne Ungrad, an official speaking on behalf of the Federal Ministry for Economic Affairs and Climate Action. 

โ€œIt is therefore important that wherever new gas infrastructure is built, the switch to renewable energy sources such as hydrogen and its precursors must also be considered and planned from the outset,โ€ Ungrad said.

The floating terminals will transition to hydrogen and other โ€œcleanโ€ liquid gases as soon as 2025, their operators say, while the onshore import terminals will start processing renewables-powered green hydrogen around the same time.

Experts have questioned the economic and technical feasibility of those promises.

Although hydrogen does not emit any polluting gases when combusted, the vast majority of current global production is in the form of โ€˜greyโ€™ hydrogen โ€“ which is produced using natural gas. Cleaner โ€˜green hydrogenโ€™ โ€“ made by splitting water via electrolysis โ€“ is being promoted as a vital climate solution by governments and industry. However, this expensive process is both energy- and water-intensive, and currently only operates at pilot scale.  

A report published by the nonprofit Fraunhofer Institute for Systems and Innovation Research in November said it was โ€œuncertainโ€ if there was a future hydrogen use case for the LNG terminals, and warned they risked becoming stranded assets. The German government has characterised such concerns as unsubstantiated. 

What does seem clear: Ballooning emissions associated with LNG production in the coming years could be very damaging to the climate.

In November, Norwegian research firm Rystad Energy shared research with the BBC that showed the carbon emissions caused by producing and shipping LNG to Europe are potentially ten times higher than those from Russian pipeline gas โ€“ due in part to the extra energy required to cool the gas for shipping, then regasify it on landing.

The analysis concluded that Europe would import an additional 35 million tonnes of carbon emissions if it replaced all its Russian pipeline gas by the end of next year, compared to 2021. Germanyโ€™s annual emissions are about 675 million tonnes.

Moveover, a November briefing by Climate Action Tracker found that plans to expand LNG will push the world further off track to meet the Paris Agreement goal to limit the rise in average global temperatures to 1.5C. 

If all the current planned projects go ahead, most of which are in North America, the global LNG industry will overshoot the emissions limits in the International Energy Agencyโ€™s net zero pathway by the equivalent of 1.9 gigatonnes of CO2 emissions per year by 2030 โ€“ about the same as the annual emissions produced by Russia, the organisation says.

Environmental Action Germany has placed climate change at the centre of a legal case it has filed against Uniperโ€™s floating terminal in Wilhelmshaven, which also raises concerns over accidents and water rights, and demands the facility operates for a maximum of 10 years.

โ€œThey call it (LNG) a bridge technology but it keeps getting longer,โ€ Jochen Martin, an environmental campaigner from Wilhelmshaven, who is not involved in the lawsuit, told DeSmog. โ€œItโ€™s becoming a very long bridge indeed.โ€

Jรถrg Schrickel, an energy consultant and environmental campaigner based in Stade, is opposing plans for an onshore terminal in the port, but says the arrival of a floating unit is inevitable. Credit: Phoebe Cooke

โ€˜Not Sustainableโ€™

And then there is the cost.

Opponents of LNG infrastructure are concerned that the gas industryโ€™s access to the government has sidelined valid concerns over the economics of the new projects โ€“ whose cost has doubled from initial estimates to more than six billion euros.

Rising natural gas prices mean that importing LNG could translate into additional costs of up to โ‚ฌ200 billion by 2030 relative to the historical average, according to a report by energy think tanks E3G, the Institute for Energy, Economics and Financial Analysis (IEEFA), Wuppertal Institut and Neon. 

That would double bills for consumers โ€“ and soak up subsidies that would be better spent on slashing demand for imported gas by significantly expanding the governmentโ€™s plans to make older buildings more efficient. Such additional demand reduction measures could negate the need to build the onshore LNG import terminals altogether, the report found. 

โ€œWe cannot just subsidise the costs (of LNG) โ€“ this is not in any way sustainable, neither financially, nor from a climate perspective,โ€ said E3Gโ€™s Mathias Koch, who co-authored the report. โ€œIt would be disastrous to continue to go down that path.โ€

With the Ukraine invasion sending prices for LNG soaring, analysts say the extra cost is driving a faster switch to renewables in many markets โ€“ meaning LNG demand could peak sooner, and leave Germanyโ€™s new import terminals idle.

โ€œThereโ€™s no guarantee thereโ€™ll be that demand for LNG,โ€ said Clark Williams-Derry, gas analyst at IEEFA, who predicts the planned onshore terminals will not live out their operational life. โ€œIn the long-haul they wonโ€™t get utilised.โ€

Thatโ€™s cold comfort for climate campaigners who are now scouring the horizon for signs of the next floating units to move into place.

Pacing a promontory jutting into the River Elbe, not far from the port of Stade, where LNG tankers will soon start to offload, Jรถrg Schrickel says it will be impossible to stop a planned floating terminal docking by the end of next year.

The energy consultant and environmental campaigner says the battle is now to persuade the government to introduce restrictions on onshore import terminals planned to open in 2026, including one at the site of a Dow Chemicals factory in Stade. 

โ€œWe can create new jobs with energy savings and renewable energy, but thatโ€™s not being talked about at all,โ€ Schrickel said, as distant chimneys from Stadeโ€™s industrial belt billowed smoke above a grey ocean vista. โ€œWe need to restrict this fossil fuel lock-in โ€“ at all costs.โ€

Editing by Matthew Green.
Additional research by Ingvild Deila and Rachel Sherrington.

Phoebe Cooke headshot - credit Laura King Photography
Phoebe joined DeSmog in 2020. She is currently co-deputy editor and was previously the organisation's Senior Reporter.

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