Will the West target Nord Stream 2 to cut German dependence on Russian gas?

The controversial Nord Stream 2 gas pipeline would be included in the package of potential sanctions being prepared by the West against Russia in case of aggression against Ukraine.

Germany's foreign minister Annalena Baerbock said on Thursday that Russia will face "massive consequences" if it attacks Ukraine, despite previously demanding an  exemption for the energy sector from the US.

German Chancellor Olaf Scholz has also previously hinted at including Nord Stream 2 in potential sanctions against Russia at a press conference with NATO Secretary-General Jens Stoltenberg on 18 January. 

One of Europe's most controversial energy projects, Nord Stream 2 is aimed at doubling the amount of gas flowing from Russia to Germany, bypassing traditional transit nation Ukraine.

The US State Department spokesperson Ned Price too said on Wednesday that the Nord Stream 2 pipeline between Russia and Germany will “not move forward” if Russia invades Ukraine.

"I want to be very clear: if Russia invades Ukraine one way or another, Nord Stream 2 will not move forward," Price said.

"I'm not going to get into the specifics. We will work with Germany to ensure it does not move forward," he added.

German authorities previously demanded an exemption for the energy sector against any possible decision of the US blocking Russian banks from its dollar transactions, according to documents seen by Bloomberg.

“We need to check carefully what has the most effect, and maybe not only what looks tough to the outside world,” Baerbock said last week at a press conference with US Secretary of State Antony Blinken.

The Nord Stream 2 project has become increasingly politicised amid growing tensions between Russia and the West, which fears Moscow may attack Ukraine to prevent it from forging close ties with NATO. Russia denies it harbours such plans.

What is Nord Stream 2?

Nord Stream 2 is a 1,200-kilometre  pipeline, which runs underwater from Russia's Baltic coast to northeastern Germany, to carry Russian gas to Europe.

It was completed in September but has not started to operate due to the certification process by the EU and Germany.

Germany's Federal Network Agency - which regulates the country's electricity, gas, telecommunications, post and railway sectors - in November suspended a process to certify the pipeline, saying the operator should register a legal entity in Germany.

The regulator said on Wednesday the certification procedure will remain suspended until the transfer of the main assets and human resources to the subsidiary has been completed and the Federal Network Agency is in a position to check the unit's documents for completion. 

"We currently cannot predict when the procedure will be resumed," it said in a statement.

The United States and several Eastern European countries are worried that Europe is too dependent on Putin's Russia with the new pipeline.

Europe’s and Germany’s dependence on Russian gas

Nearly 41 percent of the EU’s natural gas import came from Russia, according to Eurostat data for 2019.

The gas import mostly comes through pipelines, including Yamal-Europe which crosses Belarus and Poland to Germany, and Nord Stream 1, which goes directly to Germany via the Baltic Sea, and via Ukraine.Sanctions on Russia could also impact gas flow through these pipelines.

Europe's gas markets are linked by a network of pipelines. Most countries have cut reliance on Russian gas over the years. 

When it comes to Germany, it is the biggest buyer of Russian gas in the world by importing more than half of its annual needs from Russia, which is more than the EU average.

Successive German governments never built needed infrastructures to import more expensive liquefied natural gas (LNG) from the US and Qatar as the country has no LNG terminal of its own.

Alternative solutions?

Germany could impost natural gas from Norway, the Netherlands, Britain and Denmark via pipelines.

But Norway, Europe's second largest supplier, is delivering natural gas at maximum capacity and cannot make up for any missing supplies from Russia, its prime minister said. 

Southern Europe can receive Azeri gas via the Trans Adriatic Pipeline to Italy and the Trans-Anatolian Natural Gas Pipeline (TANAP) through Turkiye.

Neighbouring countries can transfer gas via interconnectors but nations may be unwilling to part with gas they might need and importers would have to pay a high price.

On top of all this, European gas storage levels are very low for winter, when demand is traditionally highest.

In the long term, the European Commission has proposed a system allowing EU countries to jointly buy strategic stocks of gas, and plans to renovate millions of buildings to save energy and curb CO2 emissions.

Several nations have options to fill the gap, including power imports from neighbours, or increased power generation from nuclear, renewables, hydropower or coal.

But nuclear availability is declining in Germany, Britain, Belgium and France due to decommissioning, phase-outs and frequent outages.

Under pressure to meet climate targets, several EU countries have shut down old coal-fired power plants. Some countries retain coal plants as back-up supply but many have already been fired up due to high gas prices.