Chancellor on an energy mission
Why Canada doesn’t want to supply gas immediately
By Sebastian Schneider
08/20/2022, 6:45 p.m
At the weekend, Chancellor Scholz and Economics Minister Habeck are traveling to Canada together. Even though it’s one of the most natural gas-rich countries in the world, at least they don’t want to talk publicly about the commodity.
While Germany is discussing gas shortages, Chancellor Olaf Scholz and Climate Protection Minister Robert Habeck are traveling to Canada with a business delegation on Sunday. But according to the official announcement, there is a lot of talk, such as quantum computers, a hydrogen agreement or a wind power plant in Newfoundland – but not about further liquid gas deliveries or LNG terminals. The country is the sixth largest gas producer in the world.
In an interview with ntv.de, however, the energy expert Malte Küper from the German Economic Institute (IW) can imagine that the visit could also be about rare earths. “Especially when it comes to raw materials such as nickel or palladium, Canada can play an even bigger role for Germany in the future,” says Küper. “The discussion about dependency on Russia is often only about coal, oil and gas.” The rare earths are currently still coming from Russia on a large scale, but they are necessary to achieve the energy transition. After all, they are installed in batteries, solar modules and wind turbines.
The farce about the turbine
There are reasons why gas is at least not discussed publicly during the visit. One of them is currently gathering dust in Mülheim an der Ruhr. The posse surrounding the serviced gas turbine for the Nord Stream 1 Baltic Sea pipeline left its mark in Canada and has been a strain on German-Canadian relations ever since.
The component was serviced in Montreal, Canada, in mid-June. At the same time, the Kremlin reduced gas deliveries to Germany through Nord Stream 1, blaming the missing component. But because of the sanctions, Canada did not want to release the turbine for return transport to Russia. And only did so after the German government asked for it. She wanted to prove that she believed Moscow was lying.
Canada’s reputation has suffered as a result. A parliamentary committee is currently reopening the case involving the serviced turbine. And adding to the outrage of the Ukrainian government, the World Congress of Ukrainians announced a lawsuit. In order to at least calm things down a bit, Scholz defended the release of the turbine in an interview with the Canadian newspaper “The Globe and Mail”.
In addition, Foreign Minister Annalena Baerbock did not travel to the capital, Ottawa, but to Montreal. Exactly where the turbine was serviced. Should Scholz pray publicly for liquid gas and LNG terminals again after the debacle surrounding the turbine, that would cause Prime Minister Trudeau, who was already politically ailing anyway, to falter further.
Lack of LNG infrastructure
Because not only the turbine causes resentment overseas. Although Canada has set itself ambitious climate targets, it is in the process of missing them. A new large gas project would be inconvenient. Because unlike Norway or Russia, the country cannot deliver the fossil fuel to Europe via a pipeline. This would require new liquid gas terminals on the east coast to transport it by ship. So far there aren’t any.
According to the Canadian government, the construction of the LNG (Liquid Natural Gas, LNG) terminals on the east coast would take about three years. This calls the whole project into question. “Of course, Germany will still need gas in the next three years. At the same time, there is a large social and political consensus to phase out fossil fuels even faster. This is also being noticed on the Canadian side. So that the construction of an export terminal for that is worthwhile for investors at all, long-term supply contracts for 15 to 20 years would have to be concluded,” explains energy expert Küper. The LNG deal with Qatar probably fell through due to similar uncertainties in terms of timing.
There are also other domestic concerns. Canada produces almost all of its natural gas in the western part of the country, in Alberta and British Columbia. In order to be able to ship liquefied gas to Europe, the pipelines running across the country would at least have to be modernized. But that’s a touchy subject. For example, warned Sylvain Gaudreault, a Quebec lawmaker, warned that the state doesn’t actually want it. And in addition to the energy transition, the planned infrastructure would cross and endanger indigenous areas.
The fracking problem
Another question is the type of gas production. It is between Canada and Russia or Norway. Because it produces most of its natural gas through fracking. The method has been banned in Germany since 2017, in Canada it is according to the International Energy Agency (IEA) around 71 percent of the natural gas that is extracted “unconventionally” – i.e. by fracking.
The energy expert Werner Zittel from the Ludwig Bölkow Foundation estimates to ntv.de that about 8 to 10 percent of the total amount produced in Canada is shale gas. Detaching it from the rock layers requires a particularly large amount of “fracking effort”. This increases the risk of damage to the environment.
In the USA, from which Germany also obtains liquid gas, the energy source is not conventionally promoted. According to Zittel, about 80 percent are fracked. “In the USA and Canada, more and more gas has been extracted from shale and tight gas fracking in recent years,” agrees energy expert Küper Zittel. “Conventional gas production is declining there.” Liquefying the gas and shipping it across the Atlantic requires even more energy.
Hydrogen instead of natural gas?
While gas could become scarce in Germany in the coming months, future demand would probably also be covered without Canadian liquid gas. “The good news is that supplies to the first two liquid gas terminals in Brunsbüttel and Wilhelmshaven are already secured until the beginning of 2024,” says Küper. Further LNG agreements will follow, but this is not so easy for the Federal Republic, according to the energy expert. “Germany needs liquid gas in order to become independent of Russian gas as quickly as possible. However, the usual contract periods for liquid gas deals of up to 20 years are in contrast to Germany’s climate goals and could deter potential partner countries.”
Because in the long term it is about becoming independent of fossil fuels. Although gas is seen as a bridging technology, it is no less harmful to the climate. Scientists from the Technical University of Berlin recently pointed this outthat gas would have a similarly poor climate balance as coal and oil. Methane, which is even more harmful to the climate than CO2, is also emitted throughout the gas value chain.
That explains why Scholz and Habeck end their visit to Canada in a wind power plant in Newfoundland. In the future, emission-free hydrogen will be produced there, which will eventually replace natural gas in Germany.
“The fixed LNG terminals can also be used to import hydrogen in the long term, but this should be planned for from the start,” explains energy expert Küper. This is already being done for the German import terminals in Stade and Wilhelmshaven. Scholz interpreted a similar thought in the interview with the “The Globe and Mail” for Canada already. “Liquid natural gas and the corresponding infrastructure are important now, but they also have to be future-proof,” he said. So maybe they will talk about LNG terminals after all.