The German economic engine has always been powered by affordable Russian energy. Now Europe’s largest economy must undertake the largest restructuring since German reunification.
At the same time that Germany must free itself from dependence on Russian gas and oil, a green transition, called Energiewende, is underway.
Fossil fuels and nuclear energy must be replaced by clean, renewable energy.
It was difficult to implement before Vladimir Putin invaded Ukraine. It became more difficult after the invasion.
A combination of several factors led to the highest price increase in 40 years.
Inflation in Germany is fueling severe energy shortages in what usually drives the European economy.
Reliance on Russian energy is Germany’s Achilles heel.
It would be painful and costly for the Germans to do without it. Russian gas supplies have already been drastically curtailed. The European Union is in the process of phasing out Russian oil.
Federal Chancellor Olaf Schultz has committed to implementing an environmentally friendly transformation. Now it will happen at a time of acute power shortage. He should be aggressive on climate policy, while at the same time defending German industrial jobs.
If this is to go well, the average household must reduce their gas consumption by 20 percent this winter.
Gas is the most important source of heating German homes. Schulz must convince the Germans that the temperature should be lowered.
He must also reject expectations that clean energy will quickly replace fossil fuels.
In order to fill gas reserves for the winter, the authorities reopened a coal-fired power plant near Hanover at the end of August. The Heiden power plant was opened in 1987 and is among the largest in Germany. Another coal-fired plant in Hohenhameln reopened in July.
At the moment, Germany cannot do without burning coal, which is the most polluting type of energy.
The German government is keen to stress that these are temporary solutions.
According to the plan, the Hayden power plant will only operate until April 2023. In a few years, the last coal-fired power plants will be closed. Coal must go if Germany is to reach ambitious climate targets.
That’s why Scholz is looking all over the world for new and cleaner sources of energy.
This week he met Prime Minister Justin Trudeau in Canada to sign an agreement on Germany’s imports of green hydrogen. The first deliveries will arrive in three years at the earliest.
Norway and the Netherlands have increased gas pipeline transfers to Germany.
New liquefied gas (LNG) stations are being built from other gas-exporting countries. But it will take longer than winter to replace Russian gas and oil.
Previously, 50 to 75 percent of Germany’s gas imports came from Russia. It has now been reduced to 35 percent.
If gas supplies from Russia stop completely, it is estimated that only six weeks will pass before there is very little gas for Germany’s needs. It will particularly affect the energy-intensive industry.
Putin’s war against Ukraine provoked opposite reactions and reactions.
Germany and the European Union have imposed harsh economic sanctions on the Kremlin. Putin has outpaced Europe by making sharp cuts in gas exports.
The giant 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 halted, or significantly reduced, gas supplies through the Nord Stream 1 pipeline.
Today, Germany is under fire for its close trade relations with Russia. It was at times a complicated relationship that was about more than just finances.
51 years ago, Chancellor Willie Brandt was awarded the Nobel Peace Prize for “Eastern Politics,” or Eastern Politics. Brandt was honored for promoting the détente between East and West in a divided Europe.
Brandt used trade to further political goals regarding the Soviet Union and the German Democratic Republic. The first Russian gas pipeline to Germany was opened in 1973. Since then, Germany trades with Russia more than any other Western country. It was developed at a different time, with a lower effort level than today.
However, long before the war in Ukraine, many in Berlin realized that dependence on Russian energy had become a problem.
The leader of the Green Party, Annalina Barbock, became the foreign minister in a neo-liberal and red-green government. I’ve always argued against Nord Stream 2 because it would make Germany more dependent on Russian gas.
There is no reason to doubt Germany’s solidarity with Ukraine.
This week Germany announced a new arms deal for Ukraine worth nearly five billion kroner.
Germany trains Ukrainian soldiers and supports Ukraine financially. On Ukraine’s national holiday, Olaf Schulz 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.
Some of this is also due to the after-effects of the pandemic, problems in global supply chains, and reduced demand in important export markets.
Friedrich Mers, the leader of the main opposition Christian Democrats, says the country may be facing the worst economic crisis since the founding of the Federal Republic of Germany. The International Monetary Fund (IMF) believes that Germany’s economic growth next year will be a weak 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 percent. Inflation appears to have temporarily peaked in May, when it was 7.9 percent.
But winters can be harsh.
Inflation can bite at a higher level. Without a stable power supply, German industry will face major problems. It’s getting cold in German homes and workplaces.
Scholz’s main task is to replace Russian energy and implement Energiewende.
Then he almost needed a new Wirtschaftswunder, an economic miracle similar to the one that brought the GDR back on its feet in the 1950s.
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