The topic of Nord Stream II is very timely as the project’s completion coincides with the waning of the so-called “Golden Age of Gas”. From the wider geopolitical and geo-economic perspective, it is helpful to remind ourselves that the current polarization surrounding the mega-project is not very helpful. The question at hand is: Are we having the right conversation about North Stream II?
In fact, I propose that the huge challenges of European energy transition and digital transition require a wider perspective. The continent’s gas supply does not depend on Russia alone. Germany’s opportunities from utilizing Nord Stream II in the diversification of the European energy mix are a case in point. For a few years now, the unquestioned Western energy community, whose origins can be traced back to the postwar era, has been replaced by more competitive relations between gas producers and consumers globally, including (but not limited to) the US’ shale gas bonanza.
Looking at this new interplay of interests amidst global challenges such as climate change holds the clues for a new dialogue on energy security and sovereignty. This dialogue, I would like to argue, could be more democratic and oriented at shared challenges, instead of exclusionist political and commercial views.
Crispation of Positions around Nord Stream II
Hardly any infrastructure project on the European continent has been more controversial than that of Nord Stream II. The debate has intensified and created more heat than light and I wouldn’t like to go into all of the details. There has been a flurry of reactions as the 1,230km long pipeline is about to be completed. It will double the Russian gas supply to Europe to 110 BCM.
The Project launched in 2015 became a convenient political punching ball in German domestic politics, between the EU’s 27 members especially in eastern Europe, and in the context of changing transatlantic relations. There is little shared understanding of the “Energy Sovereignty” concept and aligning with the European Energy Union. Fears of Ukraine becoming more exposed to Russian strong-arming have aggravated these tensions.
Nord Stream II was placed under US extraterritorial sanctions, which generated a flurry of reports and corporate/ government evasive actions.
EU Fundamentals and German Contributions
I would like to recall that the fundamentals for Europe’s global positioning industrial development between the US and China lie beyond Nord Stream II. The new EU Strategic Foresight Report of October 2020 focused on the EU dual transition (digital and green energy) and China as a systemic rival. The EU is keenly aware of its need to secure critical raw materials for the new green economy.
Top EU officials are clear about using a three-tier approach against Russia, instead of blanket economic sanctions: push-back against violations of international human rights norms, robust response to cyberattacks/disinformation, while preserving a modus vivendi in areas of shared interest or “limited engagement” which includes energy supply flows. Responding to Russia’s breach of legal certainty and procedures in the Alexey Navalny Case, the EU Council applied a new global sanctions regime against Human Rights violators for the first time in late February 2021.
I would like to note that Germany can benefit from the larger Russian gas flows as a regional hub for distribution, minimizing transit risks and creating industrial synergies. Gas experts point to possible solutions which facilitate the phase-in of renewables. Germany’s declared exit from coal and nuclear energy in 2022 is not far away. Therefore, gas provides a convenient substitute in the short run and offers “cleanest in quantity”. Nurturing mutual interdependence through ‘compartmentalization’ in energy versus security policy has been Germany’s underlying principle since the Nord Stream I Pipeline was opened.
Energy Transformation Challenges – Diversification of Southern Gas Routes
EU goals of climate adaptation under the Paris Agreement by 2030 (and reaching net zero emissions by 2050) will require a monumental restructuring in the energy sector. In any future energy mix, LNG imports are also an option.
Even a more modest post-Pandemic economic recovery in the EU compared to the United States might depend on reliable energy supply in the form of gas. Ultimately, lasting changes in emission levels depends on changing consumption patterns throughout the economy, requiring broad systematic education in consumer habits.
The EU also receives gas from Azerbaijan via the Southern Gas Corridor (SGC) and its three trunks via Anatolia in Turkey and through the Adriatic to Greece, Albania and on to Italy. Although these gas volumes are smaller (31 BCM annually), some 10 BCM of gas are destined to southern Europe. I would draw your attention to the fact that Azerbaijan is also both a gas producer and operator like Gazprom in Nord Stream II. European credit financing was made available for the SGC project.
Together with Turkey’s ambition to become an “Energy Bridge” between Asia and Europe, Russian and Central Asian gas is set to become a fixture in some southern European countries. However, other more complex gas schemes involving Turkmenistan (the world’s largest holder of known gas reserves) and branch lines from Iranian gas fields have not materialized so far for a variety of reasons.
Towards Pan-European Energy Community Dialogue
In the age of waning gas, a tendency to inter-link energy and political geostrategic and geoeconomics considerations have crowded out other approaches among technocrats and energy experts. Energy links have become echo chambers of Cold War paradigms, often without a full understanding of new global developments. Conversely, far less attention has been given to transparency over mitigating the environmental costs, educating the end-users about the transition to a new economy.
Democratizing the discussion and establishing dialogue among labor unions and consumer associations, scientists and climate experts on gas supply, storage and conservation might be possible. I would argue that this can provide confidence-building as well as prevent instrumentalizing energy links in the short term. In a pan-European setting, the OSCE is well placed to intensify such dialogue. Under the OSCE approach of comprehensive security, this has been on the agenda in the Vienna Process since 2006.
People-to- people contacts in transboundary energy flows would help address misperceptions between major gas import and export countries. Additionally, relevant labor safety and employment standards in gas industries could be boosted in cooperation with UN Agencies such as ILO. I would like to conclude by mentioning that a common interest in upskilling the energy workforce in Europe and its neighborhood could benefit from such an initiative, which creates resilience to the huge challenges ahead in energy transition and digital transformation.