Germany is estimated to have significant resource deposits and is at the forefront of the shale gas debate in Europe. Public concerns and the conclusions of studies on hydraulic fracturing, as well as stalled legislation going into the federal elections, have slowed the pace of shale gas exploration, but Germany’s nuclear phase-out will create a need for energy from other sources.
Size of the opportunity
In May 2012 The Federal Institute for Geosciences and Natural Resources estimated that Germany’s level of shale gas that could be extracted is between 70 and 230 billion cubic meters. In 2013, the U.S. Energy Information Administration study, carried out without exploratory drilling, posited that Germany has technically recoverable shale gas reserves of 481 bilion cubic metres (17 trillion cubic feet.)
Impact on energy security
Germany is heavily dependent on gas imports from Russia and Norway and is likely to become even more so with the early closure of nuclear power stations and dwindling conventional gas reserves, which led to an all-time low in gas reserve levels in 2013. Germany consumes about 81 billion cubic metres of natural gas per year, accounting for 23% of its gross inland consumption of energy. It must import 86.2% of this total. One study, published by the consultancy A.T Kearney, has stated that the principle motivation for Germany’s exploitation of shale gas deposits is not the economic benefits (although these are significant), rather the increased energy independence.
Impact on the economy
A study by A.T Kearney has stated that if Germany were to begin extracting shale gas in place of dwindling conventional gas resources, the annual savings could total around €1.4 billion by 2035. Following an unusually cold winter, and due to scarcity of gas, there was speculation that the price of gas could rise by 15-20%. Increased supply from domestic sources could help alleviate this concern.
After general elections in September, the German Federal Government, an SPD and CDU/CSU coalition, concluded in November that shale gas development in Germany would not take place until concrete evidence has been put forward to prove that the process is safe in regards to its impact on health and the environment, however this is not a legally binding agreement. In early 2014, Lower Saxony announced that it was in favour of hydraulic fracturing, and put forward a draft proposal for a decree on the permission of exploration and extraction of natural gas through hydraulic fracturing.
In the run-up to the election, Germany’s Ministry for Environment published a study into the impact of hydraulic fracturing on water and the environment. The study concluded that hydraulic fracturing should not be banned but recommended that shale gas operations should not take place in water protection zones, Environmental Impact Assessments must be mandatory for drill sites and that the ingredients of fracturing fluids must be disclosed.