German chancellor visits Canada in search for alternatives to Russian gas

 

The German chancellor is visiting Canada on what he has described as an urgent mission to extricate Germany from its dependence on Russian gas and pursue new energy supplies, as pressure mounts on his government to come up with solutions to tackle a looming crisis.

Olaf Scholz and his economy minister, Robert Habeck, accompanied by a team of officials and business leaders, plan to sign a deal to establish hydrogen supply chains as part of Berlin’s efforts to speed up its transition to renewable energy.

On his arrival in Montreal on the two-day visit, Scholz said Canada “has similarly rich natural resources to Russia – but the difference is that it is a reliable democracy”.

Scholz said “new fields of cooperation” had opened up with Canada since the Russian invasion of Ukraine.

A priority project, he said, on which the two countries wanted to work closely was the creation of a “hydrogen economy”. An agreement is due to be signed between Montreal and Berlin for the future collaboration on the production and transport of hydrogen. Scholz is also due to discuss the delivery of liquefied natural gas (LNG) from Canada to Germany with his counterpart, Justin Trudeau.

The visit is taking place amid a heated debate in Germany triggered by growing concerns that Russia may completely close down its already considerably reduced gas flows to the country.

The government faces pressure to prolong the life of Germany’s three remaining nuclear power stations, which are due to go offline by the end of the year, as part of a withdrawal strategy announced in 2011.

In recent days there have even been calls for it to reinstate the Nord Stream 2 gas pipeline from Russia, which was mothballed by the German government as a reaction to Russia’s invasion of Ukraine.

Scholz said at the weekend a decision on the nuclear power plants would probably be made in the coming days. But Habeck, the leading Green, stressed this would only help to decrease gas consumption by about 2% and said “for the little it would bring us, it’s the wrong decision”.

The government has dismissed out of hand the idea of resurrecting the defunct Nord Stream 2 project, repeatedly referring to the idea as “morally reprehensible”. But the fact it has been brought up at all illustrates the extent to which the pressure is growing on Scholz to come up with workable strategies to cope with the unprecedented situation, which threatens to plunge the German economy into recession and leave millions facing soaring energy bills and freezing homes.

The deals struck with Canada will do little to help Germany in the near future, with this winter and next expected to be beset by an energy shortage and record prices. The head of the intelligence service has warned of the dangers of unrest from a radicalised minority consisting of rightwing extremists and conspiracy theorists, which he said were planning to exploit the situation. Leading economists have warned that rising energy bills on top of other living cost hikes will push increasing numbers of Germans into poverty and could trigger social unrest.

Against this backdrop the government is keen to stress that once the infrastructure is in place to support hydrogen and LNG Germany will be on a safer footing. The optics of Scholz and Habeck landing in Montreal with their delegation are seen as sending an important immediate message to German voters that the government is taking action. In recent months it has often come across as stunned into stasis as it reeled from the shock realisation that Europe’s largest economy had made itself dangerously dependent on a single energy source in its pursuit of a green transition.

Ahead of the visit, Habeck said Germany was “staring in the face of a very critical winter”.

Habeck told German TV that the rapid filling up of national gas storage facilities – which are currently at just under 80% capacity – was encouraging, but warned that Russia could yet further reduce the flow and there was therefore no room for complacency.

At present only about 20% of the levels of gas due via the Nord Stream 1 pipeline are reaching Germany.

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