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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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Germany’s Reaction To The Energy Crisis Could Be Catastrophic

  • Germany's determination to go green despite an energy crisis in Europe could significantly impact the country's energy security
  • While power prices in Europe have been soaring and natural gas prices have begun to drop, Germany is refusing to change its energy policy
  • Specifically, it is Germany's decision to phase out nuclear power and accelerate the phase-out of coal-fired plants that has confused analysts

The European gas crisis has hogged energy headlines for months. But that hasn’t stopped Germany from retiring half of its nuclear capacity by the end of the year and pushing an accelerated phase-out of its coal-fired plants by 2030. And for Germany’s energy security, it could spell disaster. 

The commitments to greenifying Germany’s grid are noble. Unfortunately, they also appear ill-timed, as German baseload power for 2022 delivery—a European benchmark—hit a brand new contract high of 278.50 euros. This is an increase of 10%, as gas flows through a pipeline that brings natural gas from Russia to Germany switched direction to flow Eastward. 

But soaring power prices and sagging natural gas prices haven’t knocked Germany off its green ambitions—and it could have bigger ramifications than many realize. 

Coal and nuclear power, now on the ropes in Germany, rose in prominence this year, accounting for a larger percentage of Germany’s overall energy mix compared to 2020, BDEW said this week. The rise in nuclear and coal-fired power was due mainly to lower wind speeds and increased demand. 

Coal and nuclear energy made up 40% of the overall energy mix in Germany. Meanwhile, renewables fell to 41% of the mix. Still, Germany is stuck on kicking its coal and nuclear habit—coal because it’s dirty, and nuclear because of Fukushima. The decision to retire the latter was made shortly after the Fukushima disaster, but since then, coal use has risen to fill in the gaps left by nuclear. 

This year, Germany plans to shut down the Grohnde, Gundremmingen C, and Brokdorf nuclear plants, which will leave Germany with just three. Those final three will be retired by the end of next year. 

For coal, Germany has agreed to phase out coal by 2030—up from its previous goal of retiring coal in the country by 2038. 

These two moves alone put Germany, gasping for energy, in a precarious position. But there’s more. 

Related: Cities Around The World Are Trying To Cut Out Natural Gas

Germany also has a plan to kick its natural gas habit, with plans to end power generation from gas by 2040. Currently, half of all German homes are heated with natural gas.  By 2026, a ban in Germany on the installation of heating in new homes using any type of petroleum products will go into effect in favor of heat pumps that draw electricity from the grid. 

This would be the grid that is currently struggling to supply power to its people, and the grid that currently relies 40% on nuclear energy and coal-fired power that is set to be retired.

Germany’s decision to phase out nuclear power is Germany has puzzled analysts, who argue that phasing out the zero-emissions created by nuclear power while relying on natural gas and coal-fired power (at least for now) seems counterintuitive. Add to that the current predicament that Germany finds itself in being short on natural gas, and analysts are puzzled even more. In addition, nuclear power has served as a rather reliable fill-in for renewables that rely on the intermittency of sun and wind—an intermittency that has been brought to light this year more than ever. 

These rising power prices in Europe are fueling inflation, and Trafigura has warned that Europe could experience rolling blackouts if this winter turns out to be a cold one. Meanwhile, natural gas flows from Russia are a big question mark, with tensions over Nord Stream 2 and Russia’s possible invasion of Ukraine exacerbating Europe’s power situation. 

By Julianne Geiger for Oilprice.com

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  • Mamdouh Salameh on December 23 2021 said:
    It is undeniable that Germany and the EU are facing an energy crisis with rising prices of natural gas and power, shortages and even possible blackouts this winter and all because of dogma and determination to persevere with their energy transition when such policies are proving muddled and short-sighted and highly costly.

    Germany’s decision to phase out nuclear power nuclear power has intensified the use of natural gas and coal power generation thus proving counterproductive to its greenifying ambitions.

    Because of its misguided policies, the share of gas and coal which make up 40% of Germany’s overall energy mix is growing further at the expense of renewables.

    Germany’s delaying the certification of Nord Stream 2 gas pipeline can only deepen its energy crisis.

    This is the price Germany and the wider EU will pay this winter for letting dogma undermine plain common sense.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Codi on December 23 2021 said:
    Who’s running the country there? Mickey Mouse? Hey I think eliminating greenhouse gases is a good thing. But what Germany is doing is foolish and many German citizens will pay the ultimate price for their green initiative aka war on big oil.
  • Steve Walser on December 23 2021 said:
    Change "could" to "will be" and you will be accurate.
    The insanity of a continuation of such a policy coming on the heels of the current shortages and soaring prices is beyond insanity it borders on the criminal. People WILL die as a direct result of this stupidity and there is nothing "noble" about that. Death, increasing poverty and dispair are the final result of implementing such misguided policies when alternatives are nonexistent!
  • Paul Trifthauser on December 24 2021 said:
    Europe has too many governments. 26 democracies that are lorded over by the ECB is a recipe for foolishness.

    My experience living in Germany is that EU members need ways to politically differentiate themselves from their political rivals, so they bicker of things they neither understand nor control.

    Brexit was also petty and foolish. Nigel Farage spent 20 years mocking his EU counterparts, often savagely. Were it not for the US, they would probably already be in WW3.
  • Rafa? Maszkowski on December 25 2021 said:
    We cannot say Germany goal is going green when they are just going to switch off and then destroy their three best green sources and the remaining three after a year. With all the money Enegiewende has eaten used for building new NPPs instead of closing them Germany could have been already catching up France but has some 600% of French emission of CO? per kWh instead. Germany just does not believe in the global warming and does not take it seriously.

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