22 Jul 2021, 13:53
Charlotte Nijhuis

Germany and U.S. reach deal that allows completion of Nord Stream 2

Clean Energy Wire

Germany and the United States have reached an agreement resolving their long-standing conflict over the Nord Stream 2 pipeline. The deal allows for the completion of the pipeline, now 98 percent finished, which will allow Russian natural gas to flow directly into Germany. In a joint statement, the U.S. and Germany commited to working together to mitigate Russia’s energy dominance in Europe and preventing Moscow from using “energy as a weapon” in Ukraine and other countries in the region. Berlin and Washington expressed determination to “hold Russia to account for its aggression and malign activities by imposing costs via sanctions and other tools.” The countries have also pledged to invest in Ukraine’s green energy infrastructure with a fund of at least one billion dollars, including funds from private third parties. Germany will initially contribute 175 million dollars to the “Green Fund for Ukraine.” Berlin also wants to support bilateral energy projects in the country with around 70 million euros, especially in the field of renewable energies and energy efficiency. In addition, the U.S. and Germany are aiming to ensure Russian gas flow through Ukraine continues beyond 2024, when the Russia-Ukraine gas transit agreement is set to end.

In a press conference, chancellor Merkel said she is “happy that we have now succeeded.” The deal is a good step, a compromise, "but it does not overcome all differences,” she explained, adding that it remains to be seen what the U.S. Congress will say on the matter. She concluded that work still needs to be done, particularly ensuring energy security for Ukraine.

The agreement follows a meeting between Chancellor Angela Merkel and President Joe Biden in Washington on 15 July. Earlier in May, the Biden administration lifted sanctions against the German company Nord Stream AG, which is responsible for the construction of the pipeline, and its CEO Matthias Warning in a bid to keep up good relations with Germany. The sanctions were first imposed in January 2021 under President Trump following a year of threats. The pipeline under the Baltic Sea has been the subject of heated debate for years. Proponents argue it is a commercial investment that is key to Europe’s supply security, while opponents criticise Nord Stream 2 on environmental, geopolitical, and security grounds. In a recent interview Warnig, the head of Nord Stream 2 AG, said the pipeline could be operational “before the end of the year.”

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