Push for energy diversification puts German coalition to the test

  
Vice Chancellor Sigmar Gabriel

A debate over whether Germany needs to rethink its energy strategy, and reduce its dependence on Russian gas imports, is causing tensions within Chancellor Angela Merkel's right-left coalition.

Some senior centre-left Social Democrats (SPD) have questioned a remark by conservative Merkel that Europe's biggest economy, which imports some 35% of its gas from Russia, would take another look at its energy policy amid the Ukraine crisis.

Merkel's comment reflects a consensus among European Union leaders, who said earlier this month that the annexation of Crimea made them more determined to reduce dependence on Russian oil and gas.

The issue now looms large before a meeting tomorrow (1 April) between Merkel,  and the premiers of Germany's 16 federal states, about a long-awaited reform of the law on subsidies for green energy.

Hannelore Kraft, the powerful SPD premier of Germany's most populous state of North Rhine-Westphalia, demanded an explanation from Merkel.

"I expect the chancellor will tell us what exactly she meant," Kraft told the Welt am Sonntag newspaper. "Because we are undergoing a fundamental shift in the energy mix in the direction of renewable energy."

No more policy shifts

An ambitious switch in Germany to green energy, and away from nuclear power and fossil fuels, is one of Merkel's flagship policies. But it is causing upheaval for utilities, based in Kraft's state, and companies do not want another policy shift.

This month's annexation of Crimea from Ukraine has triggered the deepest East-West crisis since the Cold War, and prompted concern that Germany may be too dependent on Russian natural gas imports.

But SPD Economy and Energy Minister Sigmar Gabriel has said there was no sensible alternative to Russian gas, and it was unlikely that Russia would stop deliveries.

Experts have backed his view, saying that even if the EU were to impose further sanctions on Russia over Ukraine, Moscow had too much to lose by cutting back gas supplies to Germany.

Some firms also oppose any move away from Russian energy.

Logistics group Deutsche Post DHL's boss Frank Appel told Die Welt that there were few viable alternatives to Europe's reliance on Russian gas..

In another sign that Berlin wants to keep energy ties with Russia on track, Der Spiegel reported that Merkel's government had agreed not to veto two German-Russian deals that have drawn criticism in the media, one affecting RWE's DEA gas unit, and the other BASF's Wintershall arm.

Diversification

However, several of Merkel's conservatives support greater diversification. Some fear disruption to transit routes through Ukraine if relations between Russia and Ukraine deteriorate.

"You must watch one-sided dependency. In (the) future, we need stronger options to get gas from other countries," Bavaria's conservative energy minister Ilse Aigner told Spiegel Online.

Some experts and politicians have said Germany could source more energy from the Middle East and northern Africa. Algeria and Libya are possible suppliers, as are Qatar and Norway.

Shale gas is another option, but is highly controversial in Germany, a country with a strong environmental lobby.

Conservative Peter Ramsauer, head of parliament's committee on economic affairs, said if Germany was considering importing shale gas from the United States, then the question arose as to "why we don't embrace domestic resources".

Experts also say Germany could set up a state gas reserve, similar to its strategic oil reserve, with a three-month supply. Germany uses about 99 billion cubic metres of gas per year.

In the long term, liquefied natural gas imports may be possible but setting up the infrastructure is very expensive.

"Also an effective regulatory framework for a German liquefied natural gas (LNG) terminal (should be considered)," conservative Thomas Bareiss told Spiegel.

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