In the space of a few weeks, Germany has cut its imports of Russian oil from 35% to 12%, but it continues to wrestle with the much bigger problem of reducing its dependency on Russia’s gas.

According to the Berlin-based energy think tank Agora Energiewende, the German government must join forces with industry and the German people if it is to solve its gas problem. BRINK spoke to Simon Müller, Germany’s director of Agora Energiewende.

MÜLLER: Germany receives a large portion — 55% — of its natural gas via pipeline imports directly from Russia, and there are essentially two strategies for handling a shortfall when the gas is cut, both equally important.

The first is to find alternative supply, for example LNG. We believe that about one-third of the imports could be substituted via other supply options in Europe over the next months, which leaves two-thirds that you need to get from other countries. The second is, at the same time, to reduce demand as much as possible to close the gap between what was imported from Russia and what alternative supplies can mobilize. 

Most Natural Gas Is Used for Heating

When people think about natural gas, they often think about the power sector, but that’s actually not correct. The vast majority of gas consumption in Germany is used for heating, heating buildings, and also heating processes in industry. And then there’s a third component which is used for feedstock. 

When you look at how we can reduce consumption in the short term, one way to improve energy efficiency is by calibrating the heating system better, and also, for example, by using shower heads that use less water — this can save 10 to 15% of demand. 

Another step that households could take is to slightly lower the room temperature. As a rule of thumb, reducing the room temperature by one degree centigrade can save about 6% of heating energy. But of course, it’s individuals who need to implement this strategy.

On the industry side, price signals are crucial for getting an efficient reduction in demand so that those consumers exit the market first where gas is a marginal value from an economic perspective. We need compensation mechanisms for businesses so that they can make it through the crisis. But of course, it’s important that you don’t subsidize gas consumption because otherwise you risk making the problem that you’re trying to solve worse. 

So paying money to safeguard the economic viability of these companies, similarly like we did during the pandemic, rather than subsidizing the consumption would be the right way to go.

Helping Industry to Move Away Grom Gas

BRINK: Presumably, it would be very hard for a lot of companies to move to some other form of energy supply.

MÜLLER: Actually, it depends on which industry we’re looking at. Fertilizer is produced using vast quantities of ammonia, and the way we make this ammonia is by using natural gas. Now, Yara, the largest fertilizer company in the world, has reduced its European production by 40% in response to the very high gas prices. So essentially, rather than importing gas directly, we shift to indirect imports in the form of ammonia.

Germany has the largest gas storage capacities in Europe, and the largest storage site has been allowed to run virtually empty.

Then there’s fuel switching. A lot of the power plants that use gas are switching it to oil as an option to reduce consumption. And there are some products where production can be stopped for a while and then ramped back up without harming the overall economy.

To clarify: A supply cut would pose a massive challenge for industry. However, we need to make the right choices regarding which consumption to prioritize.

Currently, we have very limited visibility on who is consuming gas for which applications in industry. And one step that the government has done is to task the gas grid operators to conduct surveys with all consumers that consume a significant amount of gas and ask them, “What are you using this gas for?” And then find a mechanism by which you can decide in a situation of actual scarcity which demands to prioritize.

For the population, I think there is a need to communicate much more clearly that we must reduce gas consumption now. Germany has the largest gas storage capacities in Europe, and the largest storage site has been allowed to run virtually empty, which is highly problematic.

Having an information campaign and really getting the buy-in from the population is an important element, and the government hasn’t been using that lever as much as it could have. This is also essential from a climate perspective: Focusing people’s attention on energy savings and heating via heat pumps is critical for achieving our climate targets. 

The Value of Heat Pumps

BRINK: One technology that you talk about is the use of heat pumps to replace gas in heating. How do you think the government should roll that out on a large scale?

MÜLLER: What should the government do to address this? First, it has to be more economical to install a heat pump rather than a gas boiler. So the electricity taxation surcharge levies need to be reduced to make electricity more affordable in Germany. The government is taking steps in that direction. 

In Germany, we’re still providing government support for the installation of new gas heating systems, which is counterproductive and must be stopped immediately. So shifting the support systems that the government is applying to really strongly facilitates the uptake of heat pumps.

One of the main consequences of the new situation is that the scale-up of heat pumps in Europe for houses and also for industry has become absolutely crucial for structurally managing an energy transformation. And this is good news. This is a critical lever for addressing carbon dioxide emissions and, thus, fighting climate change.

BRINK: What about returning to nuclear power in Germany as an option to replace gas? 

MÜLLER: I don’t see nuclear as a viable option. Germany actually decided on its nuclear phase out 20 years ago. People often think this decision was only taken in spring 2011, but it actually dates back much further. 

We are in a position where renewables are the cheapest form of energy available. They can be scaled more quickly than nuclear. And they have a much stronger social license in Germany, which is a crucial component. So there’s actually no reason to deviate from this path. 

No country in the world is actually using nuclear as the primary decarbonization strategy, and the IEA’s roadmap to net zero by 2050 sees the role of nuclear as just maintaining its share in the electricity supply, where it stands today globally.