Nord Stream 2, the controversial Russian-German pipeline project, is generating fierce opposition in Central and Eastern Europe as well as from the European Parliament and the European Commission. But could the opponents of the pipeline, owned 50% by Gazprom and 50% by some of the largest Western European companies, stop the project? They may be able to follow a complex legal route that could place formidable obstacles in the way of the pipeline. There is also an even more complex political route that could result in a blocking of the project, but this would involve a high-stakes battle at the highest political level. Energy Post editor-in-chief Karel Beckman reports.
At a debate in the European Parliament on 6 April, the mood towards Nord Stream 2 could not have been more hostile. Petras Auštrevičius, MEP from Lithuania and Vice-Chair of the ALDE-faction (Alliance of Liberals and Democrats for Europe) in the European Parliament, called Nord Stream 2 a “killer project”, that “would kill much of what the Energy Union was intended to achieve”.
MEP (and former Polish Prime Minister) Jerzy Buzek of the European People’s Party (Christian-Democrats), and also Chair of the important ITRE Committee (Industry, Research and Energy) in the Parliament, said that “Nord Stream 2 and Energy Union cannot co-exist”. He also stressed that “the majority of the European Parliament opposes Nord Stream 2.”
By pitting Nord Stream 2 against “the Energy Union” the opponents have turned their opposition to the pipeline into a high-stakes game. The Energy Union is one of the top priorities of the current European Commission.
Ĺ efÄŤoviÄŤ and Buzek at the debate in Brussels on 6 April
But their stance is not a surprise. Earlier, on 17 March, Prime Ministers and leaders of 9 EU member states (Czech Republic, Hungary, Poland, Slovak Republic, Romania, Estonia, Latvia, Lithuania, Croatia) had sent a letter to Jean-Claude Juncker, President of the European Commission, speaking out against Nord Stream 2. They pointed out, among other things, that Nord Stream 2 poses “risks for energy security in the region of Central and Eastern Europe, which is still highly dependent on a single source of energy”.
And the European Commission itself has also taken a highly critical stance towards Nord Stream 2. In a speech in October last year, Miguel Arias Cañete, Commissioner of Climate Action and Energy, said there were were “serious doubts” whether Nord Stream 2 was compatible with the EU’s “strategy of security of supply”. He said diversification of routes and sources is key to this strategy and “Nord Stream 2 does not follow this core policy objective. On the contrary, if constructed, it would not only increase Europe’s dependence on one supplier, but it will also increase Europe’s dependence on one route.”
At the event on 6 April in Brussels, Maros Ĺ efÄŤoviÄŤ, who as Vice-President of the European Commission is in charge of the Energy Union project, voiced equally strong criticism of Nord Stream 2. “Let me be very clear”, he said. “The impact of the Nord Stream 2 project goes clearly beyond the legal discussions. Nord Stream 2 could alter the landscape of the EU’s gas market while not giving access to a new source of supply or a new supplier, and further increasing excess capacity from Russia to the EU. This raises concerns, and I am pretty sure this will play a role in this debate.”
Investment decisions
The European Parliament and European Commission seem bent on stopping the Nord Stream 2 project. But can they? The EU is not directly involved in the decision-making process around Nord Stream 2: it is the national permitting authorities of the countries whose waters the pipeline will cross that must grant approval for the project. In this case, these are the permitting authorities of Russia, Finland, Sweden, Denmark and Germany.
Currently, the Nord Stream 2 consortium is “communicating” with the permitting authorities in the five countries, says Ulrich Lissek, Head of Communications of the company. If they give approval, the pipeline can go ahead, according to Lissek: “There is an established approval process based on the rule of law that we are going through. The outcome does not depend on a political decision in Brussels.”
Lissek, who was one of the speakers at the debate in Brussels, said in a separate interview with Energy Post that, although he regarded the political debate in Brussels as “important”, “its outcome will not have a direct impact on the project”.
Nor does Nord Stream 2 wait on an FID (final investment decision), Lissek explained. In effect, the FID has already been taken: the shareholders agreement that was signed in Vladivostok on 4 September last year was the start of the project, said Lissek. (At the time of the signing, Gazprom had a 51 per cent share in the joint project company, called New European Pipeline AG, while Eon, Shell, OMV and BASF/Wintershall each had 10 per cent and Engie 9 per cent. Later Gazprom’s share was reduced to 50 per cent and Engie’s increased to 10 per cent.)
Signing of shareholders agreement: Pierre Chareyre, Klaus Schaefer, Ben van Beurden, Alexey Miller, Kurt Bock, Rainer Seele
The implementation of the agreement requires a number of separate investment decisions, such as the selection of the pipeline supplier, which took place last month, and getting the required permits from the authorities. Lissek said he does not expect problems with the environmental permits: after all, Nord Stream 1 was built in the same location and is already operational. Indeed, Nord Stream 1 also encountered a great deal of opposition, yet it has been fully approved and is functioning today. So, Lissek implied, why should Nord Stream 2 be treated differently?
Source: Nord Stream 2
 Equal access
Does this mean case closed, Nord Stream 2 will be built if the shareholders want it to? Well, not quite. As Alan Riley, professor at City Law School in London and nonresident senior fellow with the Atlantic Council, pointed out in Brussels: Nord Stream 2 may well face both legal and political obstacles that Nord Stream 1 did not encounter. (See also his in-depth article on Energy Post.) “The world has changed since the first Nord Stream was launched in 2008”, he said.
Riley noted that firstly, EU energy law has progressed (the Third Energy Package and Third Gas Directive were adopted in 2009) and secondly, Ukraine was invaded by Russia in 2014 and is still in a state of war, which creates a new political context.
According to Riley, the European Commission and individual member states do have legal options to block Nord Stream 2. The key issue here is whether EU law – specifically, the Third Energy Package – applies to the pipeline or not. Under the Third Energy Package, the owners of major gas pipelines must be independent of the suppliers of gas, and they must allow equal access to all suppliers who want to make use of the pipeline. Nord Stream 2 clearly does not conform to these requirements: it is 50% owned by Gazprom, which is a supplier, and also partly by companies like Shell, OMV and Engie, also suppliers. If the Nord Stream 2 consortium were forced to submit to the unbundling and third party access rules of the Third Energy Package, it seems clear that the business case for the project would be destroyed.
Alan RIley
However, the Nord Stream 2 consortium takes the view that since the pipeline runs offshore, the Third Energy Package does not apply to it. The rules of the Third Energy Package, says Lissek, do apply to the connecting parts of the pipeline inside Germany (owned by different companies), but not to Nord Stream itself, which runs offshore and is an “import pipeline”. He said there are ample precedents for this view: “The five gas pipelines in the Mediterranean that run from Africa to Europe are not subject to the Third Energy Package either. Nor is Nord Stream 1. So Nord Stream 2 cannot be treated differently.”
Riley disagrees. He says EU law applies to the territorial waters of the relevant member states (the 12-mile limits) and to their 200-mile Exclusive Economic Zones (EEZ). For Nord Stream 2 this means that “at least 100 kilometres of the offshore route fall under the Third Energy Package”.
If the Third Energy Package has not been applied to existing “import pipelines”, said Riley, it’s because it was not in force yet when they were built. Since it has come in force, there is no reason why it should not apply.
If he is right that would mean that the offshore pipe would need to be certified as TSO by the national regulators of the five countries involved. And under aticle 11 of the Third Gas Directive, the regulators must refuse to grant certification to a project if it does not a) comply with the “unbundling” and third-party access requirements of the Third Energy Package, and b) if the project puts at risk “the security of energy supply of the Member State and the European Union”.
possible route Nord Stream 2 according to company
Legal Service
Maros Šefčovič also alluded to this point in his speech in Brussels. “Let me underline again that EU law applies in principle also to off-shore infrastructure under the jurisdiction of Member States including their exclusive economic zones”, he said. But he added, “What exactly within EU sectorial legislation applies has to be assessed in regard to their specific provisions.” In other words, the Commission Vice-President is not entirely sure yet of the applicability of the Third Energy Package to Nord Stream 2.
A spokeswoman for the Commission did not want to make any further comments. She said “the Commission is in touch with the German Energy Regulator to find out more about the details of the project. On that basis the Commission will draw its conclusions on the extent to which EU law (internal energy market, environment, competition etc.) applies to the Nord Stream 2 project and the next steps to be taken by the Commission.”
On 19 November last year, the European Commission sought the advice of its Legal Service on this question. To the disappointment of the Commission, the Legal Service replied that the Gas Directive does not apply to the part of the project running through the exclusive economic zones and territorial waters of the member states concerned. This was reported on 7 February by the website Politico on the basis of an analysis of the Legal Service reply written by DG Energy, which Energy Post also has a copy of.
In this analysis, DG Energy concedes that “if the opinion of the Legal Service is applied, this would mean that the EU cannot claim any applicability of its energy legislation to any part of Nord Stream 2.”
However, the author of the analysis then goes on to present a contrary opinion, arguing, in a detailed Annex, why, according to DG Energy, the Legal Service opinion is wrong and EU law should apply to Nord Stream 2. Thus, the issue is not settled yet.
Huge losses
That’s as far as the Third Energy Package is concerned. But as Riley pointed out, the certification process by the national regulators also involves a “supply security test”, and he wondered, “how on earth can Nord Stream 2 ever pass such a test?”
The issue of “energy security” is a critical one in the debate around Nord Stream 2. The opponents invariably argue that the pipeline has an extremely negative impact on Europe’s energy security. This is enough reason, they say, for EU leaders to block the project. One of the critical strategical objectives of the EU’s Energy Union is after all “energy security, solidarity and trust”, as it was phrased by the European Commission when it launched the Energy Union in 2014. This phrase also appears in the official Energy Union “package” that was published on 25 February 2015. Šefčovič repeated it in Brussels: “Energy security, solidarity and trust constitute a key dimension of our framework strategy of 25 February 2015”, he said.
Ulrich Lissek
But what exactly is “energy security”? And what is “solidarity”? From an economic perspective, energy security in the gas market is defined by the European Commission as “diversification of energy sources, suppliers and routes”. As Šefčovič put it: “diversification of energy sources, suppliers and routes are crucial for ensuring secure and resilient energy supplies to European citizens and companies.”
The critics of Nord Stream 2 have no doubt that the pipeline fails to meet the energy security test on these grounds. Šefčovič said: “Nord Stream 2 could alter the landscape of the EU gas market while not giving access to a new source of suply, and further increasing excess capacity from Russia to the EU.” He added that “Nord Stream 2 could lead to decreasing gas transportation corridors from three to two, abandoning the route through Ukraine. Also the Yamal route via Poland could be endangered.”
Buzek too said that “Nord Stream 2 is against the EU strategy of energy diversification. It would further strengthen the position of a dominant supplier who is already under investigation for abusing its position.”
Yet this argument seems debatable. Even if Nord Stream 2 does not bring additional supplies (the consortium says it will, opponents deny this), all it does is change the route by which Russian gas is transported to Europe. This may not increase suppliers or bring additional routes (since there already is a Nord Stream 1), but neither does it reduce the number of routes or supplies. So how can it reduce competition or energy security?
The answer is: from an EU perspective it clearly doesn’t. From an Eastern European perspective, however, things look rather different.
Once Nord Stream 2 becomes operational, Gazprom may close down its gas transit through Ukraine (this is not certain yet), and through countries like Poland and Slovakia, either completely or partially. This will lead to huge losses for these countries. Ukraine stands to lose $2 billion in annual transit fees, but a country like Slovakia also makes $800 million annually on its gas transit contract.
This puts the opposition from Central and East European countries in a somewhat different light. For many years they have made profits from their transit capabilities. Now they are afraid to be passed by. This is painful for them, but why would Russia and its Western European partners not be allowed to decide on a more profitable arrangement for themselves? Isn’t this the whole idea of the “well-functioning gas market” the EU has managed to create – against Russian opposition – over the last seven years, since the last supply crisis in 2009, when Gazprom cut off gas transit through Ukraine?
Péter Kaderják, Director of the Regional Centre for Energy Policy Research (REKK) in Budapest – an opponent of Nord Stream 2 – said in Brussels that the diversification strategy of the EU has worked very well so far. He pointed to the new LNG terminals being built or planned in Lithuania and Poland, the new interconnectors that have been built, and the reverse flow capabilities that have been created since 2009. As a result, he said, “supply security risk has significantly decreased” and Eastern European gas markets have increasingly integrated with the west.
Péter Kaderják
The result of this diversification effort is that Eastern European countries have become much less dependent on Russia. They can now easily import gas from Western Europe. True, their market position will clearly worsen, once Nord Stream 2 is built. As Kaderják said, there will be “a widening price gap between West and East”. But one could argue that this is what competition is about. The market is not about “solidarity”.
It may also be noted that it is rather misleading to argue, as the 9 prime ministers do in their letter to Juncker, that Eastern European countries are “still highly dependent on a single source of energy”. They may still be “highly dependent” on Russia for their gas supplies, but gas is only part of their energy needs. Many countries in Eastern Europe, like Poland, Hungary and Bulgaria, actually do not use much gas in their energy mix at all. And they can choose to develop alternative sources of energy. There seems to be an element of choice involved when it comes to being “dependent on Russian gas”.
Criminal organization
None of this is meant to imply that Russia does not have geopolitical motivations in building Nord Stream 2. No doubt for Moscow Nord Stream 2 is also seen as a weapon in its conflict with Ukraine. That is what makes the issue so complex. The EU will have to decide whether it should regard Nord Stream 2 as simply an economic project, or also as a geopolitical threat.
Rebecca Harms
MEP Rebecca Harms, co-chair of the Group of the Greens in the European Parliament, had no doubts on this account. She said in Brussels that Ukraine is at war, and asked: “Why should we allow a further weakening of the country?”
The problem with this argument is that it could be applied to any project that affects the Ukrainian economy negatively. As Lissek of the Nord Stream 2 consortium said: ”Do we have to stop every economic exchange with Russia?” He complained: “Why is so much importance attached to this project? That’s not very fair.”
For Ukraine the ending of Russian gas transit would clearly be an economic blow. Yet the country also has itself to blame. For years it has allowed tremendous corruption in the gas sector, thereby putting the energy security of Western European countries at risk. The Russian decision in 2006 and 2009 to cut gas transit through Ukraine had a lot do with that.
Opponents of Nord Stream 2 argue that this past is not relevant anymore: Ukraine has firmly started on a process of reform. Šefčovič said: “Ukraine continues to be a reliable gas partner and transit country….” He added that “The completion of energy sector reforms in Ukraine [is] of utmost importance and should be further implemented. There is no better reassurance for Ukraine to remain a transit country and to attract investors to its gas assets then by completing ownership unbundling of Naftogaz and setting up an independent energy regulator in line with the 3rd Energy Package. Ukraine has all our support to make these necessary game-changing steps.”
The question is, does the energy market reform in Ukraine imply that Nord Stream 2 should not be built and the EU should help the country retain its dominant position in Russian gas transit to Western Europe? Wouldn’t this be an incentive for the country not to pursue its market reforms?
In an article published by the Atlantic Council in April, the well-known Russia expert Anders Åslund, a fierce critic of Nord Stream 2, writes that Ukraine has made tremendous progress in its energy reforms. One effect has been an “extraordinary” decline in gas consumption: “As late as 2011, consumption amounted to 59.3 billion cubic metres. In 2015, it had fallen to merely 36 bcm, of which Ukraine itself produced 20 bcm.” The expectation is that in 2016 gas consumption will fall to a mere 29 bcm, “of which Ukraine itself will produce 20 bcm”. In 2015, Ukraine imported a mere 6.1 bcm from Russia.
Åslund writes that “Energy is the linchpin of Ukraine’s independence on Russia”, and recommends that Ukraine should “stop buying gas from Russia altogether”, yet he wants Nord Stream 2 also to be stopped, as it is “instigated by Gazprom and certain German interests to weaken the EU and its energy policy to the disadvantage of Ukraine”. This does not seem consistent.
Åslund has a broader perspective, though, since he also wants Gazprom to be investigated as “a criminal organization”. He may have a point, but if Gazprom really is a criminal organization, then it seems reasonable to argue that this is what the debate in Europe should be about: not about Nord Stream 2 but about Gazprom. After all, Gazprom is dealing with Europe in many ways, supplying large amounts of gas through various channels.
Similar direction
In the end, a political process to halt Nord Stream 2 could be even more complicated than a legal process. The only way this could happen is if the European Commission and European Parliament received full support from the European Council. But that would require the agreement of Germany and other Western European member states, like The Netherlands and Austria, which stand to benefit from Nord Stream 2.
So far, the European Council has been fairly critical of the project. After a meeting in December 2015, its President Donald Tusk wrote: “Talking about the Energy Union, leaders had an exchange on the Nord Stream II project, some of them were very critical, and we also discussed the conditions that need to be met by major energy infrastructure projects. We reiterated that any new infrastructure should be fully in line with the Energy Union objectives. Not to mention the obvious obligation that all projects have to comply with all EU laws, including the third Energy Package. These are clear conditions for receiving support from the EU institutions or any Member State – political, legal or financial. Now the ball is in the court of the European Commission. But the political message of the European Council is clear and goes in a similar direction as the position expressed by the European Parliament.”
Petras Auštrevičius, Didier Seeuws and Andrey Kobolyev (CEO Naftogaz)
Didier Seeuws, Director of Transport, Telecommunications and Energy at the European Council, said in Brussels that the Council had “put forward not only legal but also political conditionality”. But Seeuws declined to speculate about what exactly a political decision from EU leaders to block Nord Stream 2 would look like. Any such move would run into one formidable problem: Russia would regard it as an extremely hostile act.
Perhaps Péter Kaderják had the wisest advice to offer at the event in Brussels. He said that if Nord Stream 2 gets built, “Regulatory measures should ensure that competition is maintained in the Central and South East European region even if Gazprom transits gas along new routes. The EU and local regulators should prevent Gazprom from blocking interconnection capacities and make it release significant gas volumes in Germany.”
This kind of compromise might be the most pragmatic outcome of the battle for Nord Stream 2. A similar solution is hinted at in the “analysis of the Legal Service reply” written by DG Energy, which refers to the possibility of a “case-specific regulatory framework for the project”. It is probably the maximum that the opponents of Nord Stream 2 will be able to achieve.
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At this juncture, outside the political and legal dispute, Nord Stream 2 suffers from severe commercial contradictions, which explain the negative attitudes. On the one hand, one can understand the intention of the NS2 Consortium to secure more direct, affordable, supplies of Russian gas to the major Western European markets, where 80% of EU gas consumption occurs and which are prone to declining indigenous production (although Norway says it can offset any gap). One the other hand the Consortium reveals (in its 21 March letter posted on its web-site) that 2/3 of NS volumes would go to Baumgarten: this would be between 18 and 30 bcma as the project progresses. So, what is the big idea? The Consortium further suggests that the Central and East European countries could access “competitive gas” from the CEGH. Most of these countries depend on Russian gas for 75 – 90 % of their demand. Under the present deliveries schedule Nord Stream 2 will have a modest impact on EU’s leading industrial and energy markets, and will not help the establishment of a functioning regional market in Central and South East Europe (lack of gas-on-gas competition). Except of course if the region does not increase its reliance on the Southern Gas Corridor and, in particular, on massive supplies of LNG. Someone must think of the International Energy Market’s completion and viability.
Gas line from Russia must be stopped because of Russian police in Syrie, because of Krim, because of Ukraine etc.
Lets them give their own medicine!!
Eastern European corruption in gas transit was the reason why Chancellor Schroeder and Putin agreed to build Nordstream 1 in the first place.
North Steam 2 will be built because Germany, Sweden, Denmark, Finland and Russia want it to be built.
This does not decrease “energy security” in Eastern Europe, but the transit fees will fall away.
The Nordstream line supplies reliable, low cost gas to Germany, France Denmark, and Holland to supplement domestic and European
North Sea – gas supplies.
There is another reason for Eastern European objections to Nordstream II that is not written about here. There are enormous fields of shale oil and gas in the European Union. The Weald field in Northwest London under the Gatwick and Heathrow airport area is estimated to hold over 3 trillion barrels of oil and correspondingly high amounts of natural gas. (That is one argument – the Brexit proponants use.)
Likewise continental Europe has massive pockets of shale oil and gas-Germany, Denmark, Holland, France, have the shale reserves but prefer to import conventionally drilled gas. Countries like Slovakia, Poland, Croatia – all want to open fracking and sell the products, hence the opposition to Nordstream II.
I also note that a Southstream line was being considered from Sochi on the Black Sea to Istanbul, Turkey, through Greece, and under the Aegean to Italy. But neither it nor the Nabucco pipeline through Turkey and Greece could compete with the short haul l.n.g. from Egyptian ports fed by gas from the Arabian peninsula.
When Ukraine gets its act together on corruption- and a stable peace is achieved – it will go back to being a major transit country from Kazakhstan and Aserbaijan- as these are two major gas producers, and the Ukraine route is the shortest to the Balkans
As for Germany-Nordstream 1 eliminated transit fees and kept prices stable. A second Nordstream line- will make nat gas in Germany even cheaper. Even if the compromise is made, and insistance is made that Gasprom feed more expensive land transit gas- onto the German grid, the deregulated German market will ensure that not one cubic meter will be sold. The lowest price offer gets the bulk share.
Germany has two reasons for massive oil and gas purchases from Russia. Russia is a major customer for industrial products like manufacturing machinery, aerospace products, high speed rail technology, automotive products, etc. German purchases of oil and gas from Russia pay for the industrial products Germany sells to Russia. I also advisedly note that the Russian oil pipelines to Germany are all on land for obvious reasons. Only gas is under sea.
Germany, Denmark, Holland, Sweden have another political reason for favouring the Northstream II solution. “Why should we pay more for overland transit gas when Northstream II gas will prove to be cheaper? And, besides, during the Syrian refugee crisis, Poland, Hungary, Slovakia, and the Czech Republic refused to take on refugees and take on their fair share of that burden!”
Germans across the political spectrum want Northstream II, thus there is no way their eastern European neighbours can block that.
Even if landline pipeline capacities are kept open, the transit fees make the gas more expensive than Nordstream Gas, and on Germany´s deregulated, and highly competitive gas market- the cheaper gas is what gets used and sold.
North Stream 1 and 2 are for supplying Germany, Denmark, France, Holland, and parts of Sweden. (along with Norwegian, Dutch, and North Sea gas.)
Look, Poles object to Northstream II because it will endanger their overland gas transit to Germany. But German´s now say “So what? You Xenophobic, best psuedo Catholics in the World refused to help us cope with the Syrian refugee crisis.”
Germany´s European neighbors to the South, North, and West do not object to Northstream II. It will not endanger the overall energy mix.
Gas prices will remain stable this way.
There is something called the “Energiewende” meaning that Germany is constantly and consistantly shifting from nuclear and fossil fuel power generation to renewable, now at rates of over 5.1% a year.
(the percentage of renewabes in the overall 2016 German power mix will be 38.2%, and for areas like Munich- 52%.) That also keeps the price of natural gas delivered to Germany stable.
Sweden, Denmark & Finland did not want North Stream 1 neither do they want NS2 and have no benefit at all of neither North Stream 1 nor 2; desinformation.
Denmark and Sweden will benefit from gas lines from Germany,
Danish want to eliminate any fossil fuel usage in the country within several decades. Their natural gas consumption will decline constantly. They do not plan to use it for electricity production (100% RE in 2030), heating (they want heat pumps, solar thermal, biomass, efficiency solutions), traffic (they want EVs) and they are working hard on synfuels production, a supplemental chemical feedstock.
Give any reference to a publication that describes that Denmark, Sweden or Finland want NS 1 or NS2!
NS1 and NS2 is a German – Russia affair exactly as the owners are.
Either NS2 is a political or a business case. If the latter then the gas tranfer cost from building NS2 is assumed to be cheaper than the tranfer cost from gas through the existing pipelines. Is it so?
The argument against NS2 is not consistent. They mention Eastern european countries security of supply. But it is clear that the sources of supply for these countries will not be reduced, because the existing pipelines from Russia will stay there and will be able to supply the gas that Eastern Europe might need, and in addition to that they now can import LNG. So, energy security for Eastern Europe will, at worst, stay as it is.
The real argument is, that some politicians want to maintain the source of income from gas transit for these countries. But it is the west european users who will have to pay the bill for maintaining this source of income for those countries. I won’t even start talking about corruption in Ukraine and the risks that this poses to energy security to some european countries that are connected to gas streams running through Ukraine.
So much about free competition and economic efficiency!
Look, I live in Munich which is already 50% renewable and will be 100% renewable by 2025 for most of the time. At present rates, Germany will be 100% renewable for power by 2030. (Munich will be 100% renewable for a doubled capacity district heat system by 2025.)
But what do we do for power when the sun is not shining and the wind is not blowing?
Fast ramping, combine gas turbine- steam turbine technology is much cleaner than coal and very efficient when combined with district heat systems the way it is done in Munich. Combined gas and steam from G.E. and Siemens has a 60% efficiency- and in conjunction with extensive district heat- a plus- greater than 95% efficiency.
However, natural gas is also needed to produce silicon. The silicon companies will be upgrading their silicon plants to also produce power with heat recapture.
Germany is also building out the technogies mentioned by Jan VeselĂ˝. The country already has over 6000 bio gas installations.
By 2040, the country will have 200.000 bio-gas installations up and running- meaning that bio-gas and solar will provide a full 3rd of German power and heat needs.
The renewable energy laws mandate either hook up to district heat systems or combined solar heat, ground heat-heat pump, backed by nat gas fired micro-chp on all new buildings.
I dare say the building I where I live in Munich is more energy efficient than most in Scandinavia It was rewindowed with 1 inch wide insulation dual pane windows in the late 90s, and then received 3 inches of facade insulation and 10 inches of rooftop. The heat is district heat coming from sewage sludge gas chp and garbage incineration chp.
I have developed a new form of hot steam dissociation and hot co² dissociation. That means the garbage incineration plant will produce 200 liters, about 1.4 barrels of fuel for every cubic meter of trash incinerated at the plant. Germany is most advanced in syn-fuels made of carbon recapture.
It is also most advanced in bio-gas systems- as said above. That build out is also continuing- with over 200.000 farms scheduled for manure methane recapture conversion by 2040.
Russia has always been a reliable partner for oil and gas to Germany since the 70s.
There is another reason why I, as a German-American, prefer NS II. Building it makes Transatlantic imports of L.N.G. from North American fracked gas non-economic. I opposed the Cove Point l.n.g. loading station in Cove Point, Maryland on the Chesapeake bay. And NS II makes trans-atlantic l.n.g. shipments from fracked gas sources from the Marcellus field very non-profitable.
NS II- will not reduce the number of nat gas sources to the E.U.. ´We still have North Sea gas being opened by Norway, Great Britain, Holland and France. And should Britain vote to stay in the E.U., the “Weald Field” is opening west of London near the Gatwick, Stanwick, and Heathrow airport areas. The Weald shale is estimated to hold 2 trollopm barrels of B
continued. I hit the send button by accident. The Weald Field in the greater London area is estimated to hold 2 trillion barrels of shale oil and about 2 trillion cubic meters of shale gas. Using non-toxic, “petro-fracking”, the Brits will increasingly open that field- while simultaneously drilling new North Sea,- Irish Sea gas, and putting up offshore wind.
That is, with Norwegian, North and Irish Sea gas supplies,and the Weald field, divergent gas sources to the E.U. are guaranteed. What NS II is all about, is lowering the delivered nat gas prices to Germany via the pipelines as they eliminate the transit fees.
Take another example. The Czech republic turned around and presented Germans with a vastly inflated bill for transmitting power from eastern East Germany to Bavaria several years ago. The Germans said “f… that” and built an large h.v.d.c. transmission line around it – to Bavaria, and cut the transmission fees on German generated power to other parts of Germany.
Of course there are Eastern european objections to NS II because they stand to lose the transmission fees. That does not endanger their own gas delivery because the lines are in place, and they can pay the same price for gas as do the Germans. Ending “transmission” state status means ending the corruption on billing the transmission which was all too often the case. Belorussia and Poland “used” more gas in running transmission pump stations- and that was what so irritated both the Germans and the Russians.
That was the reason behind NS I and is the same reason behind NS II. NS II will not endanger nat gas diversification due to the North Sea, Norwegian and Weald fields opening up, plus the L.N.G. shipments from North Africa.
There is an ongoing revolution in the German solar sector- wherebye efficiencies have been goosed to 38.2 % with the use of “stacked silicon” and “glass voltaic covers. Turbo-charged at night with a positron charge, they pick up the positron wave functions of Beta related to gravity which is converted to a.c. by special d.c. motors driving a.c.generators(adapted to installation size.) However, natural gas is needed for manufacturing the silicon and the glass voltaic systems going into those systems.
Looking at the industrial needs for manufacturing and for displacing dirty burning lignite, Germany in general wants NS II. And there is no way the Eastern Europeans can override German voters on this particular issue.
I think Kent makes a number of good points, although I agree with the commenters who point out that Finland and the Scandinavian countries are not interested in Nord Stream at all. They don’t use much gas anyway.
@Csaba: you can’t just compare the “costs” of two forms of transport; NS2 also changes the strategic position of Gazprom – they will be able to ask for lower transit fees in Eastern Europe.
Kent makes a good point on solidarity. All this asking for solidarity is destroying the EU – it means people want to get something out of the collective till, but they want to give as little as possible. Eastern Europe doesn’t do solidarity when it comes to the refugee crisis. Greece asks for solidarity after years of profligate spending. The French retire at 60, have a 35-hour work week and make it impossible for employers to fire anyone – then they want to get their hands on Dutch pension funds to help them economically. And I am sure southern and eastern Europeans will have their complaints about the Germans and the Dutch. I am in favour of an EU but only if countries take responsibility for their own actions. Eastern Europe should start making sure that they are not dependent on Russian gas anymore. They should have done that long ago.
@ Karel Beckmann. Germany has eliminated mandatory retirement at age 65, and people in good health can stay employed to age 70 if they want to. Just the opposite of France and Greece for example. I am close to 70 and still work part time as a free lamcer.
As for Eastern Europe, they neglected both “Energy Efficienciency” and “Renewable Energy” for the decades when the Germans and Scandinavians forged ahead. Despite the “Great Depression” caused by the bust of the U.S. real estate inflation market in 2007,Germany kept expanding its energy efficiency and renewable energy sector.
In 2011, the “sustainability sector” passed the automotive sector as the largest sector in the German economy. The country would not enjoy balanced government budgets, and a less than 6% overall unemployment rate if it did not have the ambitious energy efficiency and renewable energy programs in place.
You have to consider that despite the exit from many nuclear power plants, the rate of lignite and coal usage has not gone up, and the overall savings from now close to 38% renewable for 2016 create budget surpluses with “the merit order effect.
Germany was signatory to Kyoto and the Danish COP 15 accords and met their commitments.
@Csaba: The article states that the transport fees levied by transition countries like Ukrainia, Belorussia, Poland, Slovakia, and the Czech Republic are eliminated by NS I and NS II, so there are considerable savings which rapidly amortize the investment.
Over the past few years, German gas utilities have built several major new east west – north south pipelines to the Baltic sea NS 1 and NS 2 terminals. North Stream II will connect to those new pipelines carrying gas to Northrhein – Westphalia, Holland, Belgium and France.
New North South lines from the Baltic will benefit South Germany, Austria and Switzerland. They are also served by “Transalpine oil and gas pipelines from both Genoa and Friaul, Italy next to Venice.
Thus the argument that North Stream I and II only benefit Germany and Russia is rather absurd considering that gas from both pipelines will be delivered to Germany, Holland, (Denmark, a little), Belgium, France, Switzerland, and Austria. With the exception of Switzerland, these are all core EU countries that have a legitimate self interest in seeing North Stream II being built.
So the business case is that the gas tranfer cost from new NS2 will be lower than the present tranfer cost from the existing pipelines. I can understand that the germans want NS2 then. Unfortunatly that is not clear enough in the article.
Hello from CZ. From my perspective, it is simple. East-of-Germany countries are having mixed perspective about Nord Stream. Tactically, it means lost revenue from gas transfer. They don’t like this outcome, powerful energy companies are pushing hard to “captured regulators” to fight against it.
Strategically, this may mean cheaper gas for their economies. Germans have much better deals with Russians. This gas can be reselled east.
Czech representatives will be split and their position will be weak. Industry rely heavily on natural gas, so, industrial unions will push for cheaper gas.
Polish industry is still mostly coal powered, so they don’t care too much. Polish will push hard against Nord Stream.
Slowakia will be gas hub whatever will happen.
QCsaba: Mr. Beckman made it clear that Ukrania stood to lose 2 billion and Slovakia 800 million in transport feeds. Those were just examples- because Poland, Hungary, Belo-Russia also had high transit fees. The economic case for NS II is compelling.
Yes, those numbers are given but the cost of NS2 is not given. A clear statement is missing that for Germany to build a new pipeline is cheaper than to use the existing ones! Thank you for the clarification.
Just Google and you will find the estimated costs or follow links in the articles, e.g. to this article https://energypost.eu/case-nord-stream-2/ where costs are discussed.
But what is the relevance? You can’t go from the costs of a pipeline to any evaluation of whether it’s “cheaper for Germany to build a new pipeline”. Germany is not building this pipeline, commercial private companies are. They make their own judgement on market expectations, costs and prices. Whether this will turn out to be profitable depends on a lot of different factors that we don’t even know yet. But no taxpayer money is involved.
Hello, thank you all for a very interesting comments. I would like to remark just on one of the points, raised by Kent: “But what do we do for power when the sun is not shining and the wind is not blowing?” There exists a greener, cheaper, smarter and faster alternative to fast-ramping gas turbines, which, I believe, deserves to be mentioned here, and it is demand side management. In EU not yet properly exploited but with a great potential for both financial, infrastructure and CO2 savings. US case of demand response is very compelling. According to Capgemini, only by 2020 the European market can – through demand response – obtain:
1. 202 TWh of energy savings annually
2. Reduction of 100 million tons of CO2 emissions
3. Saving on new investments in electricity infrastructure, in total EUR 50 bn (approximate costs of 150 gas power plants)
4. EUR 25 bn of savings on customers’ electricity bills annually.
Plus, of course, an alternative revenue stream to flexible customers and a reliable alternative to balancing the grid, which is really struggling to integrate renewables. (I am obviously passionate about DSR). Scandinavian countries, as pointed above, have less interest in gas than in finding green ways to balance their grid. In case of Denmark, the CHPs will stop receiving state subsidies in 2018, and their competitiveness on the market will radically decrease. It is expected that majority of them will go out of business, unless they succeed to innovate their business models, hence even less need for gas in Denmark. And Kent, with all due respect to Germany and its merits mentioned above, the case with German-Danish power link, essentially blocking flow of green Scandinavian power to continental Europe makes me doubt slightly Germany’s commitment to Energiewende and Energy Union. I also wonder, why should Scandinavian countries in this light care for German interests in cheaper gas.