Chancellor on an energy mission: why Canada doesn’t want to supply gas immediately

Chancellor on an Energy Mission
Why Canada does not want to supply gas immediately

by Sebastian Schneider
08/20/2022, 6:45 PM

Over the weekend, Chancellor Scholz and Economics Minister Hebek are traveling to Canada together. Even though it is one of the most natural gas rich countries in the world, at least they don’t want to talk about the commodity publicly.

While Germany is discussing gas shortages, Chancellor Olaf Scholz and Climate Protection Minister Robert Hebeck are traveling to Canada with a business delegation on Sunday. But according to the official announcement, Newfoundland has a lot of talk—like a quantum computer, a hydrogen settlement or a wind power plant—but not about further liquefied gas distribution or LNG terminals. country is 6th largest gas producer in the world,

In an interview with ntv.de, however, energy expert Malte Kuper of the German Economic Institute (IW) can imagine that the journey could also be about rare earths. “Particularly when it comes to raw materials like nickel or palladium, Canada could play an even bigger role for Germany in the future,” says Kuper. “Discussions about Russia’s dependence are often only about coal, oil and gas.” Rare earths are currently still largely coming from Russia, but they are essential to achieve the energy transition. After all, they are installed in batteries, solar modules and wind turbines.

skit about turbine

There are many reasons not to discuss gas, at least publicly, during travel. One of them is currently gathering dust in Mülheim an der Ruhr. The poses around serviced gas turbines for the Nord Stream 1 Baltic Sea pipeline made their mark in Canada, and German-Canadian relations have been under pressure ever since.

The component was serviced in Montreal, Canada in mid-June. At the same time, the Kremlin reduced gas delivery to Germany via Nord Stream 1, blaming the missing component. But due to sanctions, Canada did not want to issue turbines for return transport to Russia. And did so only when the German government asked for it. She wanted to prove that she believed Moscow was lying.

Canada’s reputation has suffered because of this. A parliamentary committee is currently reopening the case involving serviced turbines. And adding to the outrage of the Ukrainian government, the World Congress of Ukrainians announced a trial. To at least calm things down a bit, Scholz defended Turbine’s release in an interview with a Canadian newspaper. “The Globe and Mail”,

In addition, Foreign Minister Annalena Berbock did not visit the capital, Ottawa, but instead traveled to Montreal. Exactly where the turbine was serviced. Should Scholz again publicly pray for liquefied gas and LNG terminals after the debacle surrounding the turbines, Prime Minister Trudeau, already politically ill, would further falter.

Lack of LNG infrastructure

Because not only turbines cause resentment in foreign countries as well. Although Canada has set ambitious climate goals for itself, it is in the process of missing them. A new large gas project would be inconvenient. Because unlike Norway or Russia, the country cannot deliver fossil fuels to Europe via a pipeline. Transportation by ship would require new liquefied gas terminals on the East Coast. There are none yet.

According to the Canadian government, it will take about three years to build LNG (liquid natural gas, LNG) terminals on the East Coast. This has put a question mark on the entire project. “Of course, in the next three years Germany will still need gas. At the same time, there is a huge social and political consensus to eliminate fossil fuels even more rapidly. This is also being looked at by Canada. So that “For this to be suitable for an export terminal investors would have to conclude long-term supply contracts for 15 to 20 years,” explains construction energy specialist Kuper. Failed due to uncertainties.

There are other domestic concerns as well. Canada produces almost all of its natural gas in the western part of the country, Alberta and British Columbia. In order to be able to send liquefied gas to Europe, the pipelines running across the country would have to at least be modernised. But it is a touchy subject. For example, warned sylvain goudraultA Quebec lawmaker warned that the state doesn’t really want that. And in addition to the energy transition, planned infrastructure will cross and endanger indigenous areas.

problem of fracking

Another question is the type of gas production. It is between Canada and Russia or Norway. Because it produces most of its natural gas through fracking. In Germany, this method has been banned since 2017, in Canada it is According to the International Energy Agency (IEA) About 71 percent of the natural gas that is extracted is “unconventionally” – that is, by fracking.

Werner Zitel, an energy expert at the Ludwig Bolkow Foundation, estimates ntv.de that about 8 to 10 percent of the total volume produced in Canada is shale gas. A particularly large amount of “fracking effort” is required to separate it from the rock layers. This increases the risk of damage to the environment.

In the United States, from where Germany also obtains liquefied gas, the energy source is not traditionally promoted. According to Zittel, about 80 percent are fractures. “In the United States and Canada, more and more gas has been extracted from shale and tight gas fracking in recent years,” agrees energy expert Kuper Zeitel. “Traditional gas production is declining there.” Even more energy is needed to liquefy the gas and send it across the Atlantic.

Hydrogen instead of natural gas?

While there may be a gas shortage in Germany in the coming months, future demand will probably be met without Canada’s liquefied gas as well. “The good news is that the supply of the first two liquefied gas terminals in Brunsbüttel and Wilhelmshaven is already secure by the beginning of 2024,” says Kupper. Further LNG will follow the agreement, but according to the energy expert, it is not so easy for the Federal Republic. “Germany needs liquefied gas to become independent from Russian gas as soon as possible. However, the typical contract period for liquefied gas deals of up to 20 years is contrary to Germany’s climate goals and could deter potential partner countries. “

Because in the long term it is about becoming independent of fossil fuels. Although the gas is considered a bridging technology, it is no less harmful to the climate. Scientists from the Technical University of Berlin recently pointed out thatThat gas would have the same poor climate balance as coal and oil. Methane, which is even more damaging to the climate than CO2, is also emitted up the gas value chain.

This explains why Scholz and Habeck ended their trip to Canada at a wind power plant in Newfoundland. In the future, emission-free hydrogen will be produced there, which will eventually replace natural gas in Germany.

“Fixed LNG terminals could also be used to import hydrogen in the long term, but this should be planned from the start,” explains energy expert Kuper. This is already being done for the German import terminals in Stadt and Wilhelmshaven. Scholz explained a similar idea in the interview. “The Globe and Mail” For Canada already. “Liquid natural gas and related infrastructure are important now, but they should also be future proof,” he said. So maybe they’ll talk about LNG terminals.