Germany retains stance on foreign gas support despite criticism ahead of COP27

The German government continues to say that it might support new gas projects in other countries, despite heavy criticism by environmental NGOs and activists ahead of the UN climate change conference COP27 in Egypt. 

“We can certainly imagine scenarios in which public support for the development of new gas fields is possible,” said one government official. Support would be tied to goals the German government has committed itself to, in regards to climate neutrality and the Paris Climate Agreement. 

“This means that there will be no blanket support,” the official said. To receive support, countries would have to prove that the “overarching concept” of the Paris Agreement aligns with  them. “This is certainly not an easy task, but it provides a very clear framework within which the German government can act,” said the official. 

Germany signed the pledge at last year’s COP26 in Glasgow to end foreign fossil fuel financing by the end of 2022 with very limited exceptions. NGOs have said that “insufficient implementation” of the agreement would damage Germany's credibility at the forthcoming COP27 and put a heavy burden on the negotiations. 

The official said the government “feels compliant” when it comes to the Glasgow pledge. “There, we also made it very clear that we need gas as a transitional source and reserve the right to do what is necessary to provide this transitional quality of gas as an energy source.” 

The International Energy Agency (IEA) said in a 2021 report that new oil and gas projects are incompatible with the goal of reaching net zero greenhouse gas emissions by 2050, and thus keeping the goal of limiting global warming to 1.5°C alive. In its just-released World Energy Outlook 2022, the IEA sticks to its net zero scenario, but states that amid geopolitical tensions, “Europe may want greater certainty over its gas import requirements by concluding new gas supply arrangements.” However, countries would have to make sure that a massive surge in investment in renewables, energy efficiency and other clean energy technologies happens at the same time. They would need to recognise that any new oil and gas exploration would be a risky investment and have to be as clean as possible by using the most low-emission technologies. A “wave of new oil and gas infrastructure” would be incompatible with a world that wants to reach net zero emissions by 2050, IEA says. 

German chancellor Olaf Scholz has been pushing for allowing support of foreign fossil fuel projects, and included a sentence on cooperating with potential partner countries in its 200-billion-euro support package plan. Scholz secured an agreement among leaders of the G7 at their summit in Bavaria earlier this year, which opened the door to public gas sector support that is “consistent with climate objectives.” Scholz’s government reportedly tried to agree similar wording at a recent meeting of EU heads of state and government, but failed. Plans to support Senegal’s gas projects have come under fire.

However, Germany is not the only country in favour of supporting new gas infrastructure. Italy is attempting to weaken a pledge 10 European governments intend to make this week to stop export credit support for fossil fuel projects, reported news agency Reuters. 

Germany could focus on gas transport infrastructure 

To implement the Glasgow pledge, the German government is currently working out the funding criteria for exceptions to the pledge. “We are currently discussing in the federal government how exactly any exceptions should be defined, especially in view of the current situation in the context of the energy supply crisis, as well as compliance with climate targets,” a spokesperson from the economy ministry told Clean Energy Wire. He added that as Germany is replacing its Russian fossil gas supply, the focus should be on solving infrastructure issues with a special need for action in the logistics and transport infrastructure. 

“In order to comply with the Paris Agreement and achieve the 1.5°C-target, the development of new gas fields should be avoided as far as possible,” the spokesperson said. If countries then decide to develop new gas fields, he added, the aim must be to construct the necessary gas infrastructure with as few emissions as possible and to plan the switch to renewable energy sources such as hydrogen from the outset. This could then contribute to the development of a climate-neutral energy supply.

Difficulties and high costs of making infrastructure hydrogen-ready

However, ensuring that newly built infrastructure can later be used for clean fuels such as green hydrogen often means costly and difficult conversion. While some gas pipelines might already be able to transport hydrogen easily, other parts have to be replaced, leading to major investment needs. 

A report by Fraunhofer ISI on behalf of the European Climate Foundation (ECF) puts a focus on liquefied natural gas (LNG) terminals. While such infrastructure is sometimes called ammonia or hydrogen "ready", the conversion “will require substantial technical adjustments with economic impacts,” said a press release. “It is not feasible to operate the dedicated terminal components with different energy carriers at the same time or flexibly move from one to another without adaptations.”

“Currently, it is not clear whether the terminals will not end up as stranded assets. To limit this risk, a concept for the terminal's conversion to other energy carriers should already be part of the design phase and taken into account in selection of materials and location,” said co-author Matia Riemer.