The case of German Energy Dependence on Russian Fossil Fuels: Essential Actions or Climate Neutrality?

Theodora Bampala, 02/2023

Germany, the largest economy in Europe, is suffering greatly from the energy crisis brought on by Russia’s war in Ukraine due to its heavy reliance on Russian fossil fuels. Rising costs are causing concern over permanent harm to the nation’s treasured industry sector, economic hardship for its citizens, and social unrest among policymakers, businesses, and households alike.

To outline Germany’s approach to the energy crisis, we need to first understand the impact on the economy and households. According to Robert Habeck, the German economy minister, Germany is “currently experiencing a severe energy crisis that is increasingly turning into an economic and social crisis”. It is obvious that a decline in the economy in 2023 is anticipated since the inflation rate is likely to increase further. The annual average inflation rate for 2023 is 8.8%, which is slightly above the value for the current year (8.4%). Only in 2024 will the 2% mark be gradually reached again, claims the Gemeinschaftsdiagnose.  Furthermore, the impact on the industry sector is tremendous. According to a poll of industrial enterprises conducted by the business association  BDI, 58 percent of businesses see the increase in energy and raw material prices as a “strong challenge,” and 34 percent even see it as an “existential” threat that could eventually drive them out of business. Companies responding to the study said they intended to do so by cutting back on investments in efficiency and climate change initiatives by 42%.

To continue, in accordance with the report by Mercator Research Institute, energy price increases could generate social hardships and even unrest if households are afflicted. Analysts theorize that more negative reactions such as the rejection of measures and conspiracy theories are to come, especially when there is a strong fear of price hikes while simultaneously the political measures communicated to the public are viewed as insufficient or ineffectual.

The governmental response to the energy crisis is characterized by a wide range of assistance programs for individuals and businesses that have progressively gotten larger and more comprehensive. The relief programs’ goals are lowering the price of gasoline, instituting a flat-rate public transportation fare of 9 euros, and temporarily freezing the CO2 price for buildings and transportation. In order to prevent winter gas shortages, the government encouraged residents to conserve energy, mandated savings in public institutions, and assisted in filling gas storages.

 The decision not to shut down all three of Germany’s remaining nuclear power plants at the end of this year as originally planned, but to leave two of them on emergency standby throughout the winter was rather demanding, yet controversial. DW claims that “there is a desperate need for every bit of electricity that is not generated by gas”. Given that it goes against his party’s fundamental beliefs, such as the total phase-out of nuclear energy and fossil fuels, including coal, this particular move has put Robert Habeck under fire. Similarly, the government is temporarily restarting coal-fired power units that have already been retired or were about to do so. This specific decision is claimed to reduce energy shortages over the next two winters and should not boost overall emissions beyond the Europe-wide cap or jeopardize Germany’s climate ambitions. Last but not least, in order to diversify its supply, Germany has been actively supporting the development of the nation’s own import infrastructure for liquefied natural gas (LNG). As for short-term, Germany is leasing floating units and has initiated long-term research over land-based import terminals. The start of these procedures is caused by the fact that Germany does not yet have a port where LNG may be directly imported.

In contrast to these essential actions, Germany is particularly interested in climate neutrality. Efforts to switch from fossil fuels to renewable energy sources, which have been nicknamed “freedom energies” since they allow the country to be more independent from Russia, are believed to have been re-energized by the war. The coalition of the Social Democrats (SPD), Greens, and Free Democrats (FDP) proposes to take the rollout of wind and solar power “to a completely new level” in an extensive draft law. To reach a nearly 100% renewable energy supply by 2035, it wants to free up new land for green energy production, expedite the permit process, and greatly enhance wind and solar additions. Furthermore, the government intends to move the country’s coal exit ahead from the already scheduled end date of 2038 to 2030, despite the short-term increase in coal use, but it is debated whether or not it is realistic to quit the industry so soon. Lastly, despite the difficulties brought on by the energy crisis, German business has stated that it intends to adhere to their current decarbonization commitments.


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