Germany must transform power system 'at Tesla speed' but tread carefully regarding Russian imports - econ min

The pivot away from Russian energy imports will require Germany to double down on its energy transition efforts and apply a speed similar to that of Tesla with its new factory near Berlin, Green Party economy and climate minister Robert Habeck said at a press conference following a meeting with state minister colleagues. “We cannot continue at our dozy pace,” Habeck said, arguing that the fast construction of Tesla’s European flagship gigafactory set an example of how ambitious large-scale energy transition projects can be implemented quickly. The construction of new renewable power installations, of grid and hydrogen infrastructure but also of new liquefied natural gas (LNG) terminals would have to happen at a similar speed.

The US carmaker’s gigafactory has been planned and built in just about three years, sparking a debate in the country about the hurdles that bureaucracy and hesitancy pose for the energy transition. The minister defended Germany’s careful treading regarding a full halt to energy trading with Russia after its attack on Ukraine, arguing that a complete halt to trading would “not mean just inconveniences at the individual level but immense damages to the entire society that ultimately could undermine other sanctions” against Russia. With a view to calls for suspending trade not only in gas but also oil and other energy carriers, Habeck said “rash decisions could mean we cannot sustain the sanctions.” Things would be different if Russia decided to cut energy supplies by itself, which would mean citizens would understand they cannot exert pressure on the government to lift sanctions, the minister argued. Habeck said the government would now make every effort to reduce dependence on Russia. “But as long as there’s no sufficient wiggle room, we run the real risk of underserving certain sectors of the economy.”

The Green politician said it would now be clear that “renewables make a contribution to Europe’s security” and that efforts to reduce consumption, increase efficiency and electrify more sectors would have to be greatly stepped up. While Habeck’s ministry (BMWK) together with the environment ministry (BMVU) had ruled out the extension of the runtime of Germany’s remaining nuclear plants, the minister said things could look different in the coal sector. “Every coal plant we take offline from now on will first move into a capacity reserve,” he said, arguing that “supply security currently tops all other concerns.” However, he said he was confident that possible additional emissions by coal plants that operate longer than planned could eventually be compensated for with faster renewables expansion. Habeck added that the government would also consider options for aiding struggling customers with support payments, saying that a special taxation of energy companies’ windfall gains in the current price hike could be on the cards, even though “this would be an intervention not seen before.”

Earlier this week, Chancellor Olaf Scholz firmly rejected the idea to cancel energy trading with Russia entirely, arguing that imports are still “essential” for supply security in both Germany and Europe. US president Joe Biden said his country would impose a ban on all energy imports from Russia, including oil, gas and coal, even if the country’s European allies decide to not go as far just yet. Instead, the European Commission on Tuesday said it was determined to quickly wean the continent off of Russian energy, arguing imports could be slashed by two-thirds already this year and phased out entirely “well before 2030.”