BAKU, Azerbaijan, January 12. Since the end of 2022, Germany has completely ceased the import of natural gas from the Russian Federation, a practice that had been maintained for numerous years. This stoppage has resulted in the replacement of Russian gas with imports from the Netherlands and Norway. As the trend continues, statistical data from the ninth month of 2023 indicates that Norway's share in Germany's overall natural gas supply has soared to 48 percent, reaching an unprecedented level.
Primarily, the higher cost of imported natural gas compared to Russian gas could potentially slow down production rates. At the same time, the adoption of expensive energy from alternative sources might encourage industrial corporations to consider relocating to countries with more affordable energy resources.
Prof. Dr. Franziska Holz, Deputy Head of the Energy, Transportation, Environment Department at German Institute for Economic Research (DIW Berlin) told Trend that in Germany, and elsewhere in Europe, the price for natural gas on the wholesale market is the result of a supply-demand balance.
“In other words, the Russian gas in the past was not cheaper than the Norwegian gas or the LNG at the time because, since the early 2010s and the end of oil-price indexation, European importers paid the European wholesale price. Prices today are still higher than they were before Russia reduced its supplies to Europe (since summer 2021), almost 50% higher than the price level of the 2010s. (30 - 35 €/MWh during the winter 2023/24, compared to ~20 € /MWh during the 2010s, compared to 300+ €/MWh at the peak in summer 2022),” she said.
Holz went on to add that yet, gas prices are far from the peaks in summer 2022 because it has become clear that there is no gas shortage due to the plentiful availability of gas from other sources like Norway and LNG.
“What makes gas consumption for the final consumer more expensive nowadays are not import costs, but taxes and other charges. Yet, taxes like CO2 taxes exist for a good reason because they make the emissions from natural gas use more expensive and provide incentives to avoid using natural gas and to switch to more climate-friendly alternatives. Germany, and the European Union, have a clear ending date for the use of natural gas with the target of achieving climate neutrality by 2045 (Germany) / 2050 (EU),” the expert concluded.
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