Ukraine muddles German program

Power transition takes Russian oil

BERLIN - The crisis in Ukraine has added an extra dose of uncertainty to German Chancellor Angela Merkel’s biggest domestic project: shifting the country from nuclear to renewable energy sources.

Merkel initiated a drive to move Germany away from nuclear power after Japan’s 2011 Fukushima disaster. Since then, the “Energiewende” - roughly, “energy turnaround” - has created increasing headaches.

Tensions with Russia are complicating the plans.

Germany, other European countries and the U.S. have sanctioned Moscow and threatened to impose more. The problem, however, is that Germany and several European economies depend heavily on Russian energy. Germany gets about a third of its natural gas and crude oil from Russia.

Merkel is still pushing ahead with the plan to shift away from nuclear energy. But if the situation with Russia escalates and Germany decides to try to reduce its reliance on Russian gas, there could be problems staying on track.

The decision to switch off nuclear reactors by 2022was popular in Germany.

But readying Europe’s largest economy to switch power sources has proved complicated and, at least until Merkel’s new “grand coalition” of right and left took office in December, a recipe for political gridlock.

Germany’s coast and flat northern plains offer plentiful wind power, but planning the ugly lines to get that electricity to the southern industrial heartland is hitting resistance.

A subsidy system meant to build up renewable energies is causing mounting problems.

“Make no mistake: The world is watching with a mixture of incomprehension and curiosity whether and how we will succeed in this energy turnaround,” Merkel told lawmakers in January as she set out her priorities for the next four years. “If we succeed, then I am convinced that it will be another German export hit.”

Merkel’s ambitious plan is for renewable energies including wind and sun to make up40 percent to 45 percent of Germany’s energy mix by 2025, compared with just under a quarter now, and 55 percent to 60 percent by 2035.

Critics say it’s not green enough, though: Coal and lignite - decried as pollutants by environmentalists - accounted for 45.5 percent of Germany’s energy output last year, up from 44 percent in 2012, as nuclear energy dropped to about 15 percent.

“The current path of the Energiewende is neither competitive nor low-carbon,” Daniel Yergin, vice chairman of the research and analysis group IHS, said March 18. “Costs are rising. And so are CO2 emissions, with coal’s renaissance in the fuel mix to replace nuclear and balance out the renewables.”

If Germany makes its goal of having 80 percent of its power come from renewable sources by 2050, there is no question it will add to the country’s energy security.

But along the way, as it takes nuclear power plants offline and builds up its renewable network, the country remains reliant on fossil fuels - and that means Russia.

Germany gets some 35 percent of its natural gas and oil from Russia, as well as significant quantities of coal, a dependency that weakens Germany’s energy switchover plan, said Hans-Werner Sinn, a prominent economist.

“It can’t work without Russian gas,” he said.

Alexander Rahr, research director of the Germany-Russia Forum think tank, noted that as nuclear power has been phased out, Russian coal “has taken on a more important role for Germany.”

Right now it doesn’t seem likely Russia would shut down its gas pipelines - or that Germany and other western European nations would include fuel supplies in any economic sanctions - but the situation in Ukraine does have people asking “what if?” Merkel herself conceded last week there is “some unease” among European leaders about Russian gas, but also noted “even in the Cold War the gas, the oil kept flowing.”

Germany’s priority is to ensure that energy-hungry companies such as steelmakers, chemical manufacturers and automakers remain competitive globally.

Business, Pages 25 on 03/28/2014

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