AME’s 2022 full year forecast for Germany’s natural gas demand is 207MMcmpd, a substantial 16% drop year on year. In 2023, demand is forecast to decline a further 7% to 195MMcmpd. Natural gas consumption in Germany decreased in the December quarter with the Nord Stream 1 pipeline still closed and supplies via other routes heavily restricted.
Germany is celebrating its
progress in managing to reduce its reliance on Russian gas. Russia, which used to account for more
than half of the country’s natural gas supply, hasn’t delivered any gas to
Germany since the end of August.
Germany is moving to replace all
Russian energy imports, most notably natural gas, by as soon as mid-2024, a
Herculean effort given Europe's top economy depends on Russia for the fuel to
power its industry. Half of Germany's 41.5 million households use natural gas
for heating while industry accounts for roughly a third of national demand.
Germany’s power utilities such as
Uniper and RWE are driving gas demand. Uniper’s power plants delivered about
10GW in 2021, of which 3.3GW was natural gas generated. RWE has about 41GW of
installed capacity which includes 14GW of natural gas. In 2022 natural gas
accounted for 14% or 77.5TWh of Germany’s power generation.

Germany embarked on
efforts to store gas and diversify its supplies. It
successfully filled its gas storage facilities to 98% above the set target to
reach 95% by November 2022. In a bold move the country started
building liquefied natural gas terminals, the first the “Hoegh Esperanza”, a
floating LNG terminal was inaugurated in December 2022. Not only was the FLNG
constructed at unprecedented speed, but it is also a major step in Berlin’s
quest to live without Russia gas in the not-so-distant future.
In all, the two government leased
FLNG terminals and a private one in the Baltic Sea, will allow for extra LNG
imports of some 13Bcm. During the 2023 winter, another three FLNG terminals
will be operational, and a pipeline will be expanded, boosting the capacity by
another 19Bcm. Next winter, Germany
will be capable of importing some 32Bcm, according to the terminal’s declared
regasification capacity.

The country passed a law to bring
back oil and coal-fired power plants into the country's energy mix in case of a
critical gas supply situation. This could add 10GW of reserve capacity on an
interim basis in a deal that runs until March 2024.
Germany is carrying out a stress
test on whether the lifetime of Germany's three remaining nuclear plants, which
account for 6% of the country's power mix, can be extended. A short-term
lifetime extension beyond December 2022 may be possible without ordering new
fuel rods.
Crude oil consumption
peaked at the end of the 1970s, but it remains Germany’s most important primary
energy source. Oil covered 35.2% of the country’s primary energy
use in 2022. Oil was mostly used as a transportation fuel, and only a
small fraction was used for power production.
In 2021, Germany imported
81Mt of crude oil. Russia was by far the largest supplier in 2021, delivering
34.1%. The US provided 12.5%, Kazakhstan 9.8% and Norway 9.6%. In total, 30
countries supplied crude oil to Germany.
The situation changed
significantly in 2022. During the period January to September, 28.6% of
crude oil came from Russia, which was still the largest supplier by far
(followed by the US with 13.1%). However, due to an EU embargo and
Germany’s pledge to end crude oil imports from Russia, supplies ceased
completely at the turn of 2022/2023.
From the 5th of
February 2023, the EU will also ban the import from Russia of refined
petroleum products, such as diesel fuel.
AME’s full year 2022 forecast for
demand is 2.15Mbpd, and this will decline by 0.3% to 2.14Mbpd in 2023.
Over the medium term to 2027,
Germany’s demand for natural gas is expected to grow slowly at a CAGR of 0.2%
to 251MMcmpd on the back of a strong manufacturing sector. Germany’s
unprecedented, accelerated plan to build FLNG terminals will help sustain the
upward trend in the country's gas demand over the medium term.
During the same period, oil
demand is forecast to decline slowly at a CAGR of 0.3% to 2.11Mbpd. Transport
accounts for most of Germany’s oil consumption, so the transition to renewables
has had little impact so far. Still, the energy transition has reduced the
already minor role of oil in power generation (0.8% share in 2021 gross power
production), because cheap renewable energy has crowded out oil-based
generation.
Germany’s Climate Action Law
stipulates that the transport sector must almost halve emissions by 2030
compared to 1990, which means oil use will decrease significantly.
Long Term
Long term (2028-2040), Germany’s
demand for natural gas is expected to grow slowly at a CAGR of 0.3% to
261MMcmpd as long-term emission targets fuel growing natural gas consumption.
Germany’s liquid hydrocarbons
demand is forecast to decline over the same period at a CAGR of 0.3% to
2.03Mbpd. The Germany’s government aims to reduce final energy consumption in
transport to 60% by 2050 with the help of more efficient engines. Germany aims
to have 15 million EVs on its roads by 2030; renewables will be able to
supply more of the energy required for transport, reducing Germany’s dependence
on liquid hydrocarbons. However, for certain modes of transport – such as
freight trucks – imports of synthetic fuels could become necessary.

Germany recently sealed a
long-term agreement with Qatar for the supply of LNG. Germany does not plan to
end its reliance on Russian natural gas until mid-2024. The country is spending
US$1.7 billion to import more LNG from the US and Qatar after blocking the
completed Nord Stream 2 gas pipeline from Russia to Europe. EU countries are
also working on setting up a strategic gas reserve and establishing storage
requirements to share natural gas in emergencies.
Energy Transition
Germany has committed to net-zero
by 2045. It has not submitted its own nationally determined contribution (NDC)
but is part of the EU’s targets. Germany has established targets of a 65%
reduction in emissions below 1990 levels by 2030, an interim target of 88% below
1990 levels by 2040, and carbon neutrality by 2045.
The German government has agreed
to bring forward Germany’s exit from coal “ideally” to 2030, from a previous
date of 2038. The government also said it would ensure that renewables
accounted for 80% of Germany’s electricity by 2030 and 100% by 2035, up from
45% in the past year.
This will mean installing 200GW of solar and at least
30GW of offshore wind capacity by that year, with around 2% of Germany’s
territory to be set aside for wind turbines. Germany will also aim for 10GW of
electrolysis capacity by 2030.
Despite renewable
energy reaching a record 46% share in Germany's electricity mix, the greenhouse
gas emissions of Europe's biggest economy were around 761Mt in 2022, missing a
target of 756Mt and falling behind the 2020 benchmark of a 40% cut compared to
1990. The increase in 2022 is
noticeable in the energy sector, with a rise of 27MtCO2e.
This is
because more coal was used to generate electricity in response to an increased
demand for electricity, lower electricity generation from renewable energies
(down 7%) and the higher price of gas, all factors which have worsened over
2022.
Last summer, Germany
agreed to allow the reactivation of coal-fired power plants or an extension to
their lifespans to compensate for declining gas deliveries. CO2 emissions from the energy industry in
2022 amounted to 255Mt, up 3% from the previous year, but slightly below the
sector target of 257Mt.
Germany will continue to deliver
the largest renewable capacity additions in Europe. Germany’s Renewable Energy
Act 2021 allows the development of solar PV, wind, and bioenergy with higher
auction volumes. RWE and Northland Power have formed a new joint venture to
co-develop more than 1.3GW of offshore wind capacity in the German North Sea
between 2026 and 2028.
