Germany and US attempt to smooth tensions over Nord Stream 2 with LNG
Germany and the USA have taken the first steps to overcome their recent spat over the controversial Nord Stream 2 gas pipeline. The German government invited US officials and industry representatives for a liquefied natural gas (LNG) investor conference in Berlin, highlighting common energy policy interests and offering a platform for German and US companies to 鈥渘egotiate business models鈥� with the goal of increasing LNG imports from the United States and diversifying the German energy supply.
At the conference, economy minister Peter Altmaier stressed US-German friendship. 鈥淚 have always advocated a close friendship between Germany and the US, and I believe this is in both of our national security interests,鈥� he said, calling LNG 鈥渙ne important point of cooperation鈥� between the countries.
US deputy energy secretary Dan Brouillette said his country was 鈥減repared to be a transparent, competitive and reliable supplier of LNG to Europe.鈥� The US is 鈥渏ust getting started鈥� as an LNG exporter, he added. 鈥淓nergy occupies the nexus between national security and economic prosperity,鈥� said Brouillette. 鈥淎ccess to abundant, affordable, reliable, and secure supplies of energy is a fundamental national security concern for every country.鈥�
Thank you & for a constructive dialogue on LNG and its critical role for both our countries鈥� energy future. As Germany builds new LNG import terminals, the U.S. stands ready to provide technical expertise & an alternative, reliable source of energy
鈥� Dan Brouillette (@EnergyDepSec)
The discussion took place against the backdrop of escalating tensions over the Russia-to-Germany Nord Stream 2 gas pipeline. But both officials said there was no deal stipulating that Germany must buy LNG from the US in exchange for a softer US stance on Nord Stream 2. The issues should be separate, Altmaier said, adding that it was in Germany鈥檚 interest to diversify its gas supply, and that Nord Stream 2 was an internal European matter.
US government welcomes EU decision for stricter regulation on Nord Stream 2
Germany has come under increasing fire聽from other European countries and the US government for greenlighting Nord Stream 2, a natural gas pipeline to Russia currently under construction in the Baltic Sea, which runs parallel to the existing Nord Stream pipeline. Proponents from industry and the German government argue the pipeline is a commercial investment and key to Europe's supply security. A number of EU member countries such as Poland, but also non-EU countries such as Ukraine and the US, fiercely oppose the pipeline, which they say will increase Russia鈥檚 influence while diminishing their own ability to benefit from the gas trade. In 2018,聽US President Donald Trump lashed out at the project, saying Germany was 鈥渢otally controlled鈥� by Russia.
EU member states reached a temporary truce the conflict last week, when member states decided on new rules for pipelines to and from third countries, like Nord Stream 2. Germany initially opposed the changes for fear of endangering the project. But after negotiations, France and Germany struck a deal on an amendment that would introduce stricter EU rules, but allow Germany to remain the lead regulator.
鈥淲e were encouraged by the actions we saw last week at the EU,鈥� US deputy secretary Brouillette told journalists at the press conference in Berlin.
A bridge for the energy transition
Germany鈥檚 and Europe鈥檚 energy landscape will change over the coming years, said Altmaier. Germany has decided to phase out nuclear power, and is in the midst of negotiating an exit from coal. 鈥淲e all agree that gas consumption and gas demand in Europe will increase,鈥� said the minister. While domestic production in the Netherlands decreases, more gas will be needed for electricity production and heating 鈥渁s parts of the energy supply are switched from coal to gas鈥� and sector coupling takes off. 鈥淭his is an important and necessary transition step to a sustainable hydrogen economy.鈥�
Many also see natural gas 鈥撀犅犫�� as a bridge technology for the global energy transition. 鈥淣atural gas offers the flexibility that can complement variable electricity generation coming from renewables鈥� such as wind and solar power, said Miguel Arias Ca帽ete, the EU鈥檚 commissioner for climate action and energy,聽.
But critics聽call for a focus on renewable sources of energy instead, and warn聽that betting too much on gas now could create a path dependency that will be expensive to abandon in a decade or two, when stricter climate targets take effect.
Many analysts also doubt that natural gas demand in total will rise during the energy transition as renewables, storage facilities and ultimately renewable forms of gas will cover most of the energy needs in Europe. Projections for and vary widely, .
US deputy secretary Brouillette said, 鈥淓ven if innovation and technology make renewables competitive with other energy sources far sooner than we think, it still may take decades for renewables to reach a critical mass of world energy use.鈥�
The gas industry itself is looking to power-to-gas technology, which uses renewable electricity to make synthetic gas that can be stored on a large scale and used on days with little wind or sun.
German companies聽today gave details about plans for Germany鈥檚 first industrial-scale renewable hydrogen project. German power grid operator Amprion and gas grid operator Open Grid Europe (OGE) is planning to build a 100 megawatt (MW) power-to-gas plant along with hydrogen infrastructure, a project they have dubbed 鈥渉ybridge鈥�.
Germany to get 鈥渁t least two鈥� LNG import terminals
The United States has been promoting its LNG exports to Europe for some time. It is the world鈥檚 top natural gas producer, a position ensured by the past decade鈥檚聽聽. The US is also responsible for a large share of LNG export growth. LNG, or liquefied natural gas, is natural gas that has been super-cooled (鈭�162掳C) to a liquid state for easier storage and transportation. For the US, it is the key that opens up overseas gas markets such as the European Union, which to date is largely supplied by domestic production and imports of Russian pipeline gas.
In the past, LNG import terminals have been set up throughout Europe, but not in Germany. 鈥淭hat is a problem in our eyes,鈥� said Altmaier, and added that he is 鈥渙ptimistic鈥� that 鈥渁t least two鈥� of the three domestic LNG terminal projects currently being examined for northern Germany would be built.
While the bulk of funding for the projects has to come from the private sector, Altmaier said the German government would decide 鈥渨ithin the coming weeks鈥� which of the projects would also receive state support.
His ministry also plans to聽, which would oblige grid operators to construct the necessary infrastructure to connect the projects to the German transmission grid.
A national German LNG terminal could receive supply from many countries, such as Qatar, said Altmaier, though the United States 鈥渨ill be able to significantly satisfy European demand.鈥� But there has to be a business case, he said: 鈥淧rices have to be competitive and stable.鈥澛�
鈥淭here is room to manoeuvre, there is room for a business case,鈥� Altmaier said.聽鈥淪o we must discuss the requirements. [鈥 We are serious about the terminals, we are serious about the cooperation.鈥�
