Germany’s natural gas consumption increased gradually since the 1980s from 58 billion m³ to 95 billion m³ in 2021. The continuing increase in consumption is related to the major substitution of natural oil with natural gas. It is functioning as a bridging vehicle in the government’s climate strategy to move away from coal and nuclear power to renewable energies. Compared to other fossil fuels, natural gas comes with a lower CO2 emission level from gas combustion compared to coal or oil, which makes it attractive as a power generation substitute for hard coal and lignite. However natural gas is still a fossil fuel, emitting a high amount of CO2 as well as methane. Being the main component of natural gas, methane is extremely harmful to the climate and way more potent than CO2 when looking at the global warming potential of methane in a 20-year period.
Natural gas is a central component of the energy mix in Germany. The share of natural gas in Germany’s primary energy consumption again increased slightly to around 27%. Looking into sectors, most of the natural gas 2021 in Germany is predominantly used in the industrial sector (roughly 36%), followed by private households (mainly heating with 30%), trade, commerce and service making around 13% and public power and heating supply 12% and 6% respectively. The rest is distributed between transport and the own consumption by the gas industry.
However, when long-term global warming mitigation potential comes into focus, fuel switching from coal to natural gas cannot be seen as a successful option: Natural gas, when combusted fully, is still releasing around 60% and 50% of the direct CO2 emissions compared to the hard coal and lignite combustion respectively. Moreover, Methane, as the prime element of natural gas, is a strong GHG, with significantly higher radiative forcing than CO2, resulting in high global warming potential (GWP), which is the climate impact relative to CO2. Methane is especially of concern in the natural gas supply chain. To be precise, over a 20-year time span, methane is around 84 times more potent, compared to CO2. While it counts as a short-lived climate pollutant (SLCP) with a residence time of approx. 12 years, methane leakage along the natural gas upstream supply chain may offset climate benefits from fuel switching, especially in short time frames and can therefore impact the overall GHG emissions massively.
Germany’s federal government is seeing natural gas as a transitional technology and therefore is promoting new gas heating systems and the establishment of new import pipelines and liquefied natural gas (LNG) terminals in the Northern part of the country. up the earth 84 times relative to carbon dioxide. However, current operational plans of the government to establish LNG terminals come with certain risks; of primary concern are leaks in oil and gas production facilities and pipelines causing large quantities of methane to escape into the atmosphere. Also, LNG cooling processes (to around minus 160 degrees) require an enormously high level of energy.
When we investigate the correlation between GHG levels and natural gas, by sector, the energy industry has by far the largest share of greenhouse gas emissions in Germany. And this is where natural gas plays a more dominant role these days. While general GHG emissions gradually decreased over the last years in the energy sector, further studies are in need to evaluate, what specific contribution the government’s natural gas substitution strategy, including the future LNG terminals pipeline plans and methane leakage risks, have.
Germany counts as one of the world’s largest importers of natural gas. In 2020, Germany imported 102 billion cubic meters of natural gas, by far the highest rate in Europe. Ever since the coal and nuclear phase-out plans came into place, imports increased further: Today, around 95% of natural gas is imported via pipelines. Russia, Norway, and the Netherlands, supplying roughly 50%, 30%, and 13%, respectively. Also, the US and other nations are exporting another small percentage.
But natural gas is also produced from reservoirs in Germany which in 2021 was around 5.2 billion cubic meters. Especially Lower Saxony is responsible for domestic natural gas production, covering 5% of the country’s total gas consumption. However, domestic production is slightly declining compared to 2016 levels (around 8bn cubic meters). This decline is mainly due to the increasing depletion of existing deposits.
With the beginning of the war between Ukraine and Russia, Germany has been under great pressure to find ways of liberating itself from intense import dependence and improve energy security. Compared to the beginning of 2020, the price of gas has increased twentyfold. Electricity has also become about 8 times more expensive since then. If gas supplies from Russia were to be completely cut off, this will have “drastic consequences” for the German economy. Even without a supply stop, the storage facilities are currently only about 25-27% full. The resulting demand to fill them further is driving up costs and causing further bottlenecks. In addition, the Netherlands is planning to withdraw from natural gas production and Norway is at the edge of its capacity. Thus, German Economics Minister Robert Habeck is now exploring new LNG exporting partnerships with the USA, Qatar and other exporting nations, and is strongly advocating the rapid building of LNG terminals at the North Sea port of Brunsbüttel.
BP Statistical Review of World Energy 2021:
Because of its rich coal deposits, Germany has a long tradition of using coal. It was the fourth-largest consumer of coal in the world as of 2016. Hard coal mining has been phased out in 2018 and as of 2022, lignite is continuously mined in Germany. Natural gas became a key part of Germany’s energy supply during the net-zero transformation process and is seen as a long-term substitute for the coal phase-out.
Coal-reliant economies like the US and Great Britain show that short-term displacement of coal with natural gas and renewables can come with effective GHG reductions: Annual national emissions in the US were reduced by 27% of overall CO2-equivalent (CO2eq) from 2005 to 2018 and 6% between 2015 and 2016 in Great Britain respectively. A recent Mc Kinsey study showed that Germany’s avoidance potential from coal to gas switch for 2020 was 18Mt CO2 at an average cost of 39€/ CO2t. Further, a baseline scenario between 2020 and 2030 was estimated, in which the abatement potential of Germany’s energy sector in the baseline scenario could grow up to 197 MT / CO2e.
Current developments show that consumption of natural gas increased by roughly 4 per cent in 2021, due to increased heating. Combined with the ongoing conflict in Ukraine, sharp increase in the gas price, gas-fired power plants were inferior to coal-fired power plants in terms of price on the electricity market. The gas price increase was so dominant that even the strong CO2 price increase in European emissions trading could not prevent this fuel switch from fossil gas to coal-fired power generation. Further development and numeric assessments need to be awaited to discuss the positive or negative impact on GHG emissions natural gas is causing.
A new law directive, introduced on the 1st of May, aimed to respond accurately to Germany‘s energy security issues and emphasizes natural gas. The country’s own natural gas storage facilities are currently at their lowest levels ever at this time of year. Habeck requests a mandatory level for storage facilities of a minimum of 90% in winter times and wants to introduce a binding tank reserve level, rather than leaving this decision to the companies themselves. Until today there are no strategic reserve requirements for gas and coal in Germany. This means that mainly companies themselves are able to decide on their yearly reserves. Results on the law directive will be a matter of discussion in the upcoming weeks but indicate the level of reliability and stability Germany is setting for the future energy supply for its country.
The discussion around the future of natural gas storage and its substitution potential is an ongoing debate between the leading parties. To compensate for possible shortfalls, politicians from the opposition are now questioning the planned phase-out of lignite and nuclear power. Also, a climate coalition group is currently ruling out to extend the operational life of nuclear power plants but assesses the possible reintegration of coal power in the short to mid-term. This could have consequences on the country’s set climate goals and will need to be further observed.
When Germany’s former government presented its coal and nuclear phase-out plan several years ago, it seems like their risk assessment on accepting a high-level dependency on energy imports, and the absence of an alternative plan for mid-term solutions, was relatively low. Today, the country is facing high consumer prices, low to no reserves and complex negotiations for alternative supply contracts. Also, in comparison to neighboring countries the progress on scaling alternative energy solutions has been fairly low. However, active conversations and activities around a serious transformative shift picked up recently as a result of the Russian-Ukrainian war.
It seems like the Russian-Ukraine conflict affected Germany’s decision making positively, because the country has no excuse to further procrastinate on the topic of the energy transition. It is debatable if the war has been the only trigger for progress in this matter, but one thing is clear: we are seriously running out of time and Germany really needs to speed up its level of action and prove its sincere intention to take the current status quo and make a transformative shift.
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This Post was submitted by Climate Scorecard Germany Country Manager Cimberley Gross
Image Ⓒ nairametrics/2021/06/29/