Does Germany really need LNG terminals?

Should Russia decide to cut or even halt its pipeline natural gas supplies to Europe, it could get rather cold in Germany unless sufficient supplies of liquefied natural gas (LNG) are sourced.

The problem is there are no LNG terminals in Germany for freighters to feed their cargo into the national pipeline system. But German Chancellor Olaf Scholz wants to change that as fast as possible. In response to Russia's war against Ukraine, he has announced the building of two LNG terminals in the country.

Other European nations are better prepared. Across the continent, there are now 37 such terminals, out of which 26 are located in EU member states. According to the European Commission, LNG imports cover about a quarter of the bloc's overall gas demand. Germany currently has to get LNG deliveries via terminals in Belgium, France and the Netherlands.

Does Germany need terminals of its own?

Hanseatic Energy Hub (HEH), which is planning a German LNG terminal in the northern city of Stade, said Germany must not rely on other European ports. "Going forward, other European terminals will keep receiving LNG," said HEH's Johann Killinger, pointing out that they were already approaching full capacity levels. "In the future, they won't be able to handle the overall demand on their own," he added.

NGO Food & Water Action Europe disagrees. It claims that between January 2021 and January 2022 only some 40% of the terminals' capacity was used, saying there is still much room for maneuver.

There have been plans for LNG terminals in Germany for years, with the potential locations most frequently mentioned being the northwestern cities of Stade, Brunsbüttel and Wilhelmshaven. A request for a building permit could be handed to the authorities in Stade over the next couple of weeks, according to Killinger.

He said if everything goes according to plan, the terminal could be completed by 2026 and could take in 10% of Germany's gas requirements.

Are there better alternatives?

Germany aims to say goodbye to energy from fossil fuels by 2045. Until then, natural gas is considered to have a bridge function, as it is deemed to be less damaging to the environment in comparison to coal and oil. On the other hand, LNG has a bigger ecological footprint than pipeline gas.

The cooling, liquefying and transport processes as well as the post-transport warming procedures require a lot of energy. The liquefying process alone commands between 10% and 25% of the gas' total energy content.

So, is it really worth buying a new LNG port, which in the case of Stade would require an investment of €1 billion ($1.1 billion)?

"We asked the German government whether it has an overview of LNG terminal capacities in its neighboring countries, and the answer was 'no, there's no complete overview yet'", said Sascha Müller-Kraenner from the German environmental pressure organization DUH.

"If it emerges that storage capacities and imports are enough to meet gas demand — even if no more gas comes via Russian pipelines — we should not engage in this nonsense and focus solely on expanding renewable energy resources," he said.

There's been criticism from other nature conservationists too, because LNG from the US in particular is based on the environmentally harmful fracking technology. "Fracking gas is no way of arriving at energy security, but it's part of a fossil fuel impasse," said Greenpeace's Gerald Neubauer.

Investments contingent on government backing

Terminal planners are aware of that criticism and fear a future where LNG is no longer desired. Killinger said help from the government is needed to make investments pay off nonetheless. He talks about assurances concerning the operating period of such terminals and the money operators will have to pay for feeding LNG into the national gas grid.

In other nations, the fees paid for this are lower than those for pipeline gas, and Killinger hopes such indirect subsidies will become a reality in Germany as well.

Constantin Zerger from the DUH lobby group said "granting a competitive edge for 25 years would be a severe blow to achieving climate neutrality by 2045."

In Wilhelmshaven, earlier plans to build a terminal were buried toward the end of 2020 as demand for LNG slumped and the terminal would not have been profitable. But now things are moving again as policymakers want utility Uniper to reconsider the former project.

Gas today, hydrogen tomorrow?

Another option widely debated among planners is the possible conversion of LNG terminals into green hydrogen terminals in the future. The German government is very much in favor of using more hydrogen as a source of energy in the decades ahead.

As not enough green hydrogen can be produced in Germany itself, it would have to be imported, and LNG terminals could be part of the solution, agrees German Economy Minister Robert Habeck. "We will need hydrogen terminals anyway, so we could use part of the LNG terminal infrastructure," he said.

The question is how much you'd have to invest to turn LNG terminals into hydrogen terminals. "The transformation and retrofitting process is anything but simple," said the DUH's Müller-Kraenner. "Large parts of the installations will have to be replaced, and that's going to be very expensive again."

Sound investments from the get-go?

Claudia Kemfert from the German Institute for Economic Research (DIW) told public broadcaster NDR that "we'd need hydrogen terminals right from the start to implement the country's energy transition," adding that LNG terminals wouldn't make any sense as they would mean an investment in old technologies.

If Germany succeeds in raising the share of renewables in its energy mix to 80% by 2030, dependence on Russian gas would decrease considerably," she said.

On the other hand, LNG terminals could also handle gas made from renewables. But Müller-Kraenner argues there won't be a significant market in the near term for synthetic gas — hence the import of such gas would be technically feasible, but not practical.

Gerald Neubauer agrees, saying that that the idea of importing synthetic methane or biogas boils down to greenwashing, all the more so since producing synthetic methane uses too much energy. "Biogas is only climate-friendly, if it's produced from residues, and available quantities of such gas are almost negligible."

The US would profit from German LNG terminals. As a major gas exporter, the United States had been against Russia's Nord Stream 2 pipeline right from the start. For political reasons, that pipeline, which was built to pump Russian gas to many European countries, was halted over Russia's war in Ukraine.

This article was originally written in German.