The Nord Stream 2 pipeline: Economic, environmental and geopolitical issues

Briefing 01-07-2021

The EU's dependence on Russian gas imports shows no signs of lessening. Although the Green Deal envisages a carbon-neutral Europe by 2050, natural gas remains a key part of the energy mix as coal is phased out and renewable energy is not yet ready to fully take up the slack. EU domestic gas production is fast declining, and there is not enough gas at affordable prices from alternative suppliers to replace Russian production. Launched in 2015, the Nord Stream 2 pipeline connects Russia and Germany directly via the Baltic Sea, following a similar route to Nord Stream 1 completed in 2011. Construction has taken several years, with delays due to protracted legal battles and, since 2019, US sanctions. Nevertheless, pipe-laying continues and is on track for completion in the next few months. Few energy projects have ever been as hotly debated as Nord Stream 2. Pipeline owner Gazprom, a Russian state-controlled company, argues that it is needed to meet the EU's growing demand for gas imports. Germany's energy sector also sees the pipeline as a viable commercial project. Some opponents point to the environmental impact of the pipeline's construction, as well as the contradiction between the EU's climate goals and long-term investments in fossil fuel import infrastructure. However, the pipeline's geopolitical implications are its most controversial aspect. Critics, including several EU Member States, describe Nord Stream 2 as a Kremlin project to export malign Russian influence as well as gas to Europe. They note that, combined with the new TurkStream pipeline delivering Russian gas to south-eastern Europe, it will eventually enable Russia to starve Ukraine's ailing economy of much needed transit fee revenue. The pipeline looks set to perpetuate Russia's stranglehold on EU energy markets and compromise European strategic autonomy.