Mecklenburg-Vorpommern Economy

Opinion: Germany’s energy policy U-turn should help kickstart Canadian LNG

Shortly after Russia annexed Crimea in 2014, Poland’s then-prime minister Donald Tusk called for the European Union to step up efforts to diversify the continent’s energy supply.

“Regardless of how the standoff over Ukraine develops, one lesson is clear: excessive dependence on Russian energy makes Europe weak,” Mr. Tusk wrote in a Financial Times op-ed in which he laid out a five-point plan for breaking Russia’s lock on the European gas market that included importing liquified natural gas from North America.

The following year, the European Commission unveiled its “energy union package” in a bid to coordinate an energy supply diversification strategy among the EU’s 27 member countries.

“Energy policy is often used as a foreign policy tool, in particular in major energy-producing and transit countries,” the commission said, in a direct reference to Russia’s ability to leverage Europe’s dependence on its gas to exert influence on EU foreign policy.

“As part of a revitalized European energy and climate diplomacy, the EU will use all its foreign policy instruments to establish strategic energy partnerships with increasingly important producing and transit countries or regions,” the commission added. “The EU will continue to integrate Norway fully into its internal energy policies. The EU will also develop its partnerships with countries such as the United States and Canada.”

Yet, seven years later, as the world reels in horror at Russian President Vladimir Putin’s unleashing of a full-scale war in Ukraine, Europe remains as or more dependent on Russian energy. The reason lies in the short-sightedness of leaders who yielded to domestic environmentalists opposed to importing liquefied natural gas (LNG) from North America.

Germany’s Social Democratic Party favored the construction of the Nord Stream 2 pipeline to pump more Russian gas to Germany over LNG imports because they considered hydraulic fracturing, the process by which shale gas was produced, to be a greater evil than Mr. Putin’s violence and corruption .

“If we don’t get the gas from Russia, the alternative is fracking-derived gas from the US,” Manuela Schwesig, the Social Democratic premier of Germany’s Mecklenburg-Vorpommern state, told Fortune magazine in 2020. “This is certainly the worse alternative from an ecological standpoint, and more expensive too.”

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Then, Christian Democratic Union Chancellor Angela Merkel’s CDU-SPD coalition government was being urged by many in the West to cancel Nord Stream 2 in the wake of the poisoning of Russian opposition leader, Alexey Nalvany, which Washington concluded had been orchestrated by Russia’s intelligence agency .

Sadly, it took Mr. Putin’s brutal military assault on Ukraine last week to get Ms. Merkel’s SDP successor as chancellor, Olaf Scholz, to jettison his country’s misguided energy policy. After suspending the certification process for Nord Steam 2, Mr. Scholz on Sunday unveiled plans to build two LNG terminals and increase gas storage capacity.

“The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security,” Mr. Scholz said. “We must change course to overcome our dependence on imports from individual energy suppliers.”

Germany’s reversal and the prospect of new LNG developments elsewhere in Europe creates new opportunities for Canada, the world’s fourth largest gas producer, and second largest “free world” producer after the United States.

Canada missed the boat during an LNG development boom a decade ago. It must not make the same mistake again. Yielding to pressure from environmentalists who oppose LNG export terminals and gas pipelines on the grounds that such developments prolong global dependence on fossil fuels, or prevent Canada from meeting its own greenhouse gas reduction targets, will only end up strengthening the hand of Mr. Putin and his fellow dictators.

Besides, increased natural gas supplies are critical to weaning Europe and Asia off coal. Counting on renewables alone to fill the gap is not a realistic strategy, no matter how virtuous it sounds or how many votes progressive politicians think it will help them win in the next election.

The federal government should do everything in its power to promote and facilitate the construction of LNG export facilities in Quebec and Atlantic Canada, where several LNG projects have been proposed in recent years. This will require a Scholz-like U-turn in Ottawa. Luckily, there are tentative signs of that could happen: The read out of Prime Minister Justin Trudeau’s Feb. 13 call with the German Chancellor made a specific reference to “potential future co-operation on liquefied natural gas” between the two countries.

Yes, climate change is an existential global threat that must be addressed collectively. But environmental policies cannot be made in isolation from other national security and economic imperatives, or as has often been the case, just to satisfy domestic political constituencies. Germany appears, duely, to have learned that lesson. Canada should, too.

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