- Russia’s war against Ukraine puts import dependence in spotlight
- What impact will the energy transition have on imports?
- European Union’s import dependence
- Germany's import dependence
In 2020, the European Union imported 57.5 percent of the energy it consumed as its own production and stock changes satisfied only 42.5 percent of its needs. Germany’s energy import dependency was still higher at 63.7 percent – a slight decrease compared to the previous year’s 67 percent.
With an increasingly integrated European energy system, the significance of a country-focused analysis of import dependence will decline, and an EU-wide one will come into focus.
1. Russia’s war against Ukraine puts import dependence in spotlight
The global energy crisis fuelled by Russia’s war against Ukraine has put a renewed focus on the debate about Europe’s and Germany’s dependence on imported fossil fuels, and especially their heavy dependence on one single supplier: Russia.
Until the end of 2021, Russia was the main supplier of oil and natural gas to the EU. Following Russia’s invasion of Ukraine in February 2022, imports from Russia decreased substantially due to sanctions from both sides and the war’s influence on trade and infrastructure. (See below for details)
2. What impact will the energy transition have on imports?
Overall dependence on energy imports will change dramatically for some countries as the energy transition progresses. The rapid expansion of renewable energy is likely to alter the power and influence of certain states and regions and to redraw the geopolitical map in the 21st century, said a 2019 report published by the International Renewable Energy Agency (IRENA).
The plan to reach climate neutrality by 2045 should all but eliminate fossil fuels from Germany’s energy mix. The German government has introduced interim greenhouse gas emission targets for the years until 2040 with the Climate Action Law. The European Union as a whole aims for climate neutrality by 2050.
As fossil oil and gas are being phased out, many see the need to partly replace them with synthetic fuels. Renewable electricity is converted into hydrogen, methane or synthetic petrol (power-to-x) to serve as energy sources in certain areas, for example in industry, road freight transport, shipping or seasonal energy storage. According to several studies and politicians, Germany will have to import significant amounts of these green fuels, because space for generating electricity from renewables is limited in the country and power-to-x fuels could be produced significantly cheaper in other regions of the world. Thus, while Germany will likely reduce its overall dependence on energy imports, it will continue to rely on supply not only from within the European network but also from third countries.
3. European Union’s import dependence
The EU produces large parts of its energy domestically, with about 40 percent from renewables and 30 percent from nuclear, and the rest mostly from solid fuels like hard coal and lignite, and some from natural gas and crude oil.
Still, most energy needs (about 60%) are met through imports. Together, imports of oil, gas and solid fuels made up about 15 percent of total extra-EU imports in 2021 (% of trade in value). This grew substantially in 2022 (to about 25% in the third quarter) as the energy crisis drove up prices on global markets.
By trade value, about 60 percent of the EU’s energy imports in the first three quarters of 2022 were petroleum products, followed by gas (about a third) and coal (less than 5%).
By net mass, Russia was the main extra-EU supplier in 2021 (e.g. 25.8% petroleum oil, 43.9% gas), followed by Norway. However, the situation changed dramatically over the course of 2022 during the energy crisis. In the third quarter of that year, Russia supplied 18.3 percent of petroleum oil (still largest supplier) and only 15.3 percent of natural gas (Norway now the largest supplier).
[Think tank Bruegel has also compiled information and a dataset on European gas imports.]
Energy import patterns vary widely across the EU member states. While more than 80 percent of imports by countries such as Malta, Greece and Sweden were petroleum products in 2020, over a third was gas in Hungary, Austria and Italy. The total import dependency rate in 2020 ranged from 10 percent (Estonia) to more than 90 percent (Cyprus, Luxembourg and Malta).
In 2020, the EU member state by far the least dependent on energy imports was Estonia (10.5%), followed by Romania (28.2%) and Sweden (33.5%). Estonia’s high degree of energy self-sufficiency is based on domestically produced oil shale, an energy-rich sedimentary rock that can be either burned for heat and power generation or used for producing liquid fuels, according to the 2019 International Energy Agency (IEA) country report.
4. Germany's import dependence
Oil consumption peaked at the end of the 1970s, but it remains Germany’s most important primary energy source. Oil covered 35.2 percent of the country’s primary energy use in 2022. Oil was mostly used as a transportation fuel, and only a small fraction was used for power production.
According to the Federal Institute for Geosciences and Natural Resources (BGR), about 98 percent of Germany’s primary mineral oil consumption had to be imported in 2021. The country’s domestic crude oil output from 44 oilfields amounted to 1.8 million tonnes that year.
In 2021, Germany imported 81 million tonnes of crude oil (the country also imports additional mineral oil products). Russia was by far the largest supplier in 2021, delivering 34.1 percent. The U.S. provided 12.5 percent, Kazakhstan 9.8 percent and Norway 9.6 percent. In total, 30 countries supplied crude oil to Germany.
The situation changed significantly in 2022. Official data show that from January to September, 28.6 percent of crude oil came from Russia, which during that period was still the largest supplier by far (followed by the U.S. with 13.1%). However, due to an EU embargo and Germany’s pledge to end crude oil imports from Russia, supplies ceased completely at the turn of 2022/2023. From 5 February 2023, the EU will also ban the import from Russia of refined petroleum products, such as diesel fuel.
What impact will the Energiewende have on oil imports?
Transport accounts for most of Germany’s oil consumption, so the transition to renewables, which has largely been focused on electricity, has had little impact so far. Still, the energy transition has reduced the already minor role of oil in power generation (0.8% share in 2022 gross power production), because cheap renewable energy has crowded out oil-based generation.
The Climate Action Law stipulates that the transport sector must almost halve emissions by 2030 compared to 1990, which means oil use must decrease significantly. However, the effects of the coronavirus pandemic in 2020/2021 pushed greenhouse gas emissions in transport slightly below 1990 levels, where they had stagnated for three decades.
The government aims to reduce final energy consumption in transport to 90 percent of 2005 levels by 2020 and to 60 percent by 2050 with the help of more efficient engines. However, consumption has actually increased (with a dip in pandemic year 2020 helping Germany reach its target). If electric cars catch on as the government hopes – the new coalition aims to have 15 million e-cars on German roads by 2030 --, renewables will be able to supply more of the energy required for transport, reducing Germany’s dependence on oil imports. However, for certain modes of transport – such as freight trucks – imports of synthetic fuels could become necessary.
Gas covered a little less than a quarter of Germany’s primary energy use in 2022, making it the country’s second most important energy source. Germany is among the world’s biggest natural gas importers -- around 95 percent of its gas consumption is met by imports, according to the BGR. In 2021, the country produced 5.7 billion cubic metres (bcm) of natural gas, but according to geologists, the fields are nearing depletion. Domestic natural gas production has been falling since 2004 and will likely cease altogether in the course of the 2020s.
While Russia’s war against Ukraine has reignited the debate about the possibility of unconventional fracking in Germany, legal restrictions, opposition by the population and the current government, and the goal of climate neutrality by 2045 make its use very unlikely.
Germany imported 5,009 petajoules (PJ) of natural gas in 2021, according to the Federal Office for Economic Affairs and Export Control (BAFA). The share of imports by country remained unclear for several years. Due to data privacy regulations, BAFA stopped publishing import volumes by country in 2016. However, the economy and climate ministry said in 2022 that before Russia’s invasion of Ukraine, 55 percent of gas imports came from Russia, 30 percent from Norway and 13 percent from the Netherlands.
Energy industry association BDEW said early estimates showed that in 2022 about 20 percent of gas used in Germany came from Russia. The organisation said that in some cases it is difficult to attribute the origin of the gas that crosses the borders into Germany. For example, pipelines from Austria or Switzerland can contain Russian natural gas (via Ukraine) as well as Algerian natural gas or LNG from Italian LNG terminals. "Therefore, plausible estimates and assumptions must be used to calculate the origin mix," said BDEW.
Germany stopped receiving pipeline gas from Russia in late August 2022. While there is no EU embargo on natural gas, the government said shortly after the start of the war that it intended to reduce the share from Russia significantly over the course of two years. However, Russia itself reduced supplies step-by-step and halted them completely in the summer of 2022, shortly before explosions destroyed the Nord Stream pipelines – the only direct gas links between Germany and Russia. [Also read the factsheet Gas pipeline Nord Stream 2 links Germany to Russia, but splits Europe]
Gas used to be imported to Germany exclusively via pipelines, but the war prompted chancellor Olaf Scholz to decide to set up a domestic import infrastructure for liquefied natural gas (LNG). The first floating terminal was built in record time and went online at the end of 2022. Germany can also be supplied via terminals in neighbouring countries, where the LNG is regasified and fed into the natural gas pipeline infrastructure.
What impact will the Energiewende have on gas imports?
Germany’s plan to become climate neutral by 2045 also means fossil gas will have to be largely phased out by then. Currently, most of the gas is used in the industrial sector (e.g. for power and heat supply, or in chemical processes), followed by private households (mostly heating), public power and heating supply, manufacturing and trade. Natural gas consumption in transport is marginal. The lion's share of gas is burned to produce heat, and only a fraction is used to produce electricity.
Germany’s government and many experts see natural gas as a bridge to a low-carbon economy because it produces much less CO₂ emissions when combusted than either coal or oil. However, fugitive emissions, like the leakage of methane during production and transportation, need to be taken into account to evaluate total lifecycle greenhouse gas emissions. Gas complements fluctuating power supply from renewables rather well, because modern gas-fired power stations (unlike coal) can switch from idle to full output within minutes if necessary.
The former German government said that the planned exit from nuclear and coal-fired power generation means that mid-term gas demand will increase. However, many analysts doubt that total natural gas demand will rise during the energy transition as efficiency increases and renewables, storage and ultimately renewables-based gases (such as green hydrogen) will cover more and more of the energy needs across Europe. Projections for future EU and German gas demand vary widely, many foreseeing a decrease.
Russia’s war against Ukraine and its effects on German gas supply have re-opened the debate about the role of gas in the country’s energy transition. The government plans to present its LNG strategy in early 2023, which could include more information.
Power-to-gas as a way of converting electrical energy into methane or hydrogen for direct use or the long-term storage of renewable power have only been tested in pilot projects and have yet to be used on a larger scale. The federal government strongly bets on green hydrogen in its quest for climate neutrality, and says much of it will have to be imported. In a 2018 analysis, think tanks Agora Energiewende and Agora Verkehrswende also said that Germany would need the well-directed use of power-based synthetic fuels, including gas, in connection with a phase-out of conventional oil and natural gas to reach its long-term climate targets. The think tanks agree that large amounts must be imported.
Germany’s largest domestic fossil fuel source is coal, but its consumption has decreased a lot in recent years, with a rebound in 2021 and 2022 – first due to unfavourable weather conditions for renewables and high gas prices, then also due to government efforts to bring coal plants back to replace gas use in power production.
Germany still extracts lignite (or brown coal) from opencast mines for power production on a large scale – 126.26 million tonnes in 2021 - and imports very little, according to the BGR. For years, Germany was the world’s biggest producer of lignite – which emits particularly high levels of CO₂ – and the country still has extensive deposits. Lignite covered about ten percent of Germany’s primary energy use in 2022. Most is burned for power generation (20.4% of Germany’s gross electricity production in 2022) or district heating.
Due to unfavourable geological conditions, German hard coal is not competitive on the international market, and subsidised hard coal mining ended in 2018. Germany now has to import all the hard coal it uses, mainly by the energy sector (e.g. for power generation: 11.5% of gross electricity in 2022) and for steel production. Hard coal covered ten percent of Germany’s primary energy use in 2022. (See the CLEW factsheet on coal for further details)
In 2021, Germany imported 41.1 million tonnes of hard coal. Its leading coal suppliers were Russia (49.9%), the United States (17.2%) and Australia (13.4%). Due to an EU ban, Germany ceased to import Russian coal in summer 2022. The association of coal importers said that “the very high – 50 percent -- share of Russian coal in total imports can be replaced by coal from other exporting countries,” but there were logistical issues to be tackled, such as ports running at their limits.
What impact will the Energiewende have on coal imports?
The new government coalition decided to pull forward the phase-out of coal to 2030 (from 2038), and has already made a deal with the western German mining region. However, eastern states are reluctant to agree to an earlier phase-out. The former government had decided a shutdown timetable for lignite plants and introduced auctions to compensate hard coal plant operators for early decommissioning. The new government will now have to re-assess these plans, also due to the energy crisis and to efforts to have more coal power for a limited period of time.
In the past, critics of Germany’s current push to reduce the use of CO2-intensive lignite had said the country should not abandon its only sizeable domestic energy source. Mining union IG BCE, for example, warned in 2015 that the Energiewende can only succeed if Germany doesn’t play “Russian roulette” with its supply security. The union argued that “domestic energy sources ensure German companies don’t become even more dependent on price and supply fluctuations on world markets. Our lignite can guarantee this in a balanced energy mix.”