Germany on March 2 took more steps to diversify its energy supplies in a bid to cut dependence on key supplier Russia, announcing a 1.5 billion euro order for non-Russian LNG and slowing its exit from coal.

“Pragmatism must trump every political commitment,” Economy Minister Robert Habeck told public radio Deutschlandfunk in remarks that would have been unthinkable by a Greens minister a week ago.

“The security of supplies must be safeguarded,” he added, addressing fears of blackouts and rationing of gas for heating.

Habeck’s comment are the latest sign of how Russia’s invasion of Ukraine has upended Germany’s planned transition toward carbon neutrality, forcing the government to reconsider its planned nuclear and coal exits.

Russia is the largest supplier of gas to Germany, accounting for 38%, according to data on the Economy Ministry’s website. Coal and gas jointly accounted for 43% of Germany’s gross power production last year.

As part of its diversification efforts, Germany has commissioned its gas market trading hub to buy LNG for 1.5 billion euros (US$1.7 billion) from outside Russia, despite Moscow having met all its contracted supply obligations so far, the ministry said on March 2.

In a letter to Trading Hub Europe that was reviewed by Reuters, the ministry said that further orders were likely in the medium to long term.

In response to Russia's invasion of Ukraine, Germany has stopped certification of the Nord Stream 2 gas pipeline which would have carried Russian gas to Germany. It has also announced plans for LNG terminals and for national gas and coal reserves to be tapped in case of a dearth of gas imports.

Extending the lifespan of coal plants is another option.

“Short term it may be that, as a precaution and in order to be prepared for the worst, we have to keep coal-powered plants on standby and maybe even let them operate,” Habeck said.

RWE, Germany’s largest power producer, said it was open to the idea of relying on coal-fired power plants currently in reserve, reviving mothballed stations or delaying shutdowns planned for this year under Germany’s coal exit plans.

Comments