Will the European green deal destroy the partnership between Germany and Russia?
In 2019, the EU decided on a new economic development strategy that aims to achieve carbon neutrality by mid-century. This means that the demand for coal, oil, and gas from European countries will be reduced to zero in less than 30 years. Is this possible in principle? And how will Brussels’ plans transform the Old World’s partnership with our country? After all, for the most part, we export hydrocarbons and refined products there.
The participants sought answers to these and other questions 13th Russian-German Raw Materials Forum, which was supposed to take place in Leipzig, but due to the coronavirus pandemic was held in an online format. On the Russian side, the conference was attended by Deputy Prime Minister Alexander Novak and Minister of Industry and Trade Denis Manturov, and on the German side by Peter Altmaier, Minister of Economy and Energy, and Gerd Müller, Minister of Economic Cooperation and Development. The latter, in particular, stated the need to develop partnership relations between our countries, and, most importantly, expressed a great interest in the completion of Nord Stream 2.
It would seem to be a clear contradiction to the new postulate, which assumes a systematic reduction of CO2 emissions. But in fact, it makes perfect sense. Natural gas has been called a “transitional technology” that will make it possible to abandon the use of dirtier coal in the energy sector and then gradually reduce emissions to zero. At the same time, none of the German delegates gave a clear answer to the question as to when exactly Europe will pass the peak in demand for methane and will be able to completely abandon fossil fuels. This is understandable because it is one thing to adopt a program and quite another to implement it in practice while maintaining the reliability and availability of electricity supplies to businesses and households.
But what should Russia do? How can we build our energy strategy and plan the scale of energy exports if we don’t understand the real level of energy consumption by our Western partners in the future? Talks that it’s vital for Moscow and Berlin to conclude a full-scale agreement on cooperation in the energy sector that would spell out, among other things, the expected demand for different types of raw materials at each stage of the energy transition, have been going on for a long time. But so far there has been no progress in this direction.
Kirill Molodtsov, the Assistant Head of the Presidential Administration, spoke about the need to change the situation during the panel discussion “European Green Deal: Its Role and Impact on Cooperation with Russia” held as part of the forum. He reminded that the partnership between our country and the Federal Republic of Germany in the energy sector had lasted for over 50 years and had remained reliable and mutually beneficial. To a large extent, this has been achieved due to the predictability of both parties and their commitment to dialogue.
“We’re used to taking responsibility for our words. We always do what we say. And if the EU is interested in supplying Russian primary raw materials and reducing its carbon footprint, then let’s work together in this direction. Let’s create working groups, companies that will work to implement this agenda in practice. This includes the introduction of technology to capture CO2. And most importantly, let us clearly articulate how much natural gas and other natural resources you will need. What will be the global energy balance of Europe and Germany in 10, 20, 50 years? Russia is ready to guarantee the stability and reliability of the energy supply to the EU throughout the 21st century, but to do this we need to understand what your expectations are in this area,” said Kirill Molodtsov.
The right to formulate an answer to this question was given to the head of the Center for Energy, Climate and Resources at the Munich Institute for Economic Research (IFO), which, among other things, calculates the Business Climate Index in Germany every month, Karen Pitel. She emphasized that the energy relations between our countries “will definitely change.” After all, Europe “has set a goal to achieve climate neutrality by 2050, which means that oil and gas imports will gradually decline.”
"The fact is, Russia is not getting any clear signals from the EU to decide on what technologies to bet on in the future. This does not mean, of course, that the EU wants to push Russia away from itself so that it (even more - ed.) turns toward China. We cannot do without imports. Another thing is that today we are talking about imports of natural gas, and then maybe we will be interested in hydrogen supplies. If we talk about the speed of the energy transition and whether it will be fully realized, it largely depends on the development of innovative solutions, which should allow us to come to a new energy paradigm as quickly as possible. I am referring primarily to hydrogen. Will it be able to supply energy reliably? Will nuclear power remain a part of our energy mix? There is a whole bunch of questions that still have no answers. But we must give them soon. In any case, I’m sure that Russia will continue to play a huge role in our energy policy, but what exactly it will be, I don’t know yet,” said Ms. Pitel.
One of the ideologists of the global energy contract between our country and Germany is Vladimir Litvinenko, rector of St. Petersburg Mining University and co-chairman of the forum from the Russian side. He drew the attention of the conference participants to the fact that the focus of discussions on the prospects of achieving carbon neutrality has recently shifted from the need to reduce the volume of CO2 emissions to calls for complete abandonment of fossil fuels, including natural gas.
At the same time, all forecasts clearly indicate that the consumption of oil, and even more so, methane, will continue to grow for years to come. This means that mankind needs not only to build new wind turbines and solar panels but also to introduce technologies that increase the “purity” of traditional resources. Otherwise, a paradoxical situation will occur in the middle of the century - the demand for oil and gas will remain high, but they, despite all the efforts of the international community, will continue to be harmful to nature.
“You can feed society as much as you want with promises of a near-term energy transition or the introduction of hydrogen as a global energy resource. But the reality is that lower investment in the exploration and exploitation of oil and gas fields will lead not to a reduction in emissions, but to a shortage of electricity and the abandonment of greenhouse gas capture innovations by thermal power plants due to a lack of funds. At the same time, hydrogen, on which today we have great hopes, may not come true due to a huge number of technological problems and lack of scientific progress in this field. Many do not know that it is impossible to load H2 into the existing pipeline instead of methane - its molecule is so small that it can penetrate the crystal lattice of steel and destroy it relatively quickly, especially in places of welds. No one can say for sure when scientists will be able to solve the problem of transport and storage of nature’s lightest gas, or if they will be able to do it in principle. How, then, can we make plans to replace natural gas with hydrogen?” asks Vladimir Litvinenko.
Ulf Heitmuller, Chairman of the German energy company VNG, is also sure that the demand for methane will remain high for years to come. He agreed with Peter Altmaier, who called the resource “bridge technology” during the opening ceremony. But he stressed that “the bridge is very long.”
“Natural gas will continue to play an important role in the European and German energy mix. Its imports will grow until 2035 because sales in the EU will remain at a consistently high level. This will be facilitated by the phasing out of oil and coal, which is very important for the climate. In addition, EU production is gradually decreasing and we will need something to close this gap. This is why we welcome all projects that can increase gas supplies to Europe and, above all, Nord Stream 2. In the longer term, the role of gas will still be important. There is an opinion that we won't be able to do without it completely, especially since the relevant infrastructure has already been created, which means that the cost of gas generation will still be comparatively low,” stressed Mr. Heitmuller.
Natalia Komarova, the Governor of the Khanty-Mansi Autonomous Okrug, which is the leading hydrocarbon producer in the country, agreed with Vladimir Litvinenko’s statement that the demand for fossil fuels will remain at a very high level for decades to come. And in this regard, we should "not reduce its production, because it is a product in high demand on the market, but increase the efficiency of its use, while introducing technologies that minimize environmental damage.
“Vladimir Putin has repeatedly stated that Russia shares the concern about climate change and takes a responsible approach to fulfill its obligations in reducing the man-made impact on the environment. This is indeed the case. In Yugra, for example, we have created the infrastructure for environmental observations - the Mukhrino field station, which is part of a European project. We invite representatives of the German scientific community to take part in it," said Ms. Komarova to her German partners.
Of course, reducing human impact on the environment is not just a tribute to fashion, but a vital necessity, the urgency of which is beyond any doubt. Deputy Minister of Industry of the Russian Federation Vasily Osmakov also spoke about it. He told the participants of the discussion about the efforts being undertaken in Russia in this connection. In particular, he spoke about the implementation of the program of transition to the best available technologies. In addition, the official noted that “all industry, all investors are now geared towards the implementation of green projects and reducing the negative impact on nature.”
“The discussion about which technologies can be recognized as green and which cannot is not yet over. It is extremely important for us to take the chance and work out unified international standards in this area, otherwise, foreign trade will soon face many problems. And we have enough of those in the current environment,” the deputy minister said.
Let us remind that earlier, during the opening ceremony of the 13th Russian-German raw Materials Forum, Michael Kretschmer, Prime Minister of the German federal state of Saxony, admitted that he was “deeply impressed by how much work on reducing CO2 emissions and introducing green technologies is carried out in Russia today.” He was also in favor of a speedy end to the construction of Nord Stream 2.