German Investments and Europe's Industrial Prospect

Relations between Germany and Norway are experiencing a intensity they have not had before. Chancellor Olaf Scholz met three times last year with Norwegian Prime Minister Jonas Gahr Stére. And Deputy Kencellari and Economy Minister Robert Habeck in the past ten months has visited Oslo twice, recently Thursday (05.01.2023).

The current reason concerns the fact that Norway has become Germany's main gas supplier since Russia has almost completely cut off its gas supply. A third of the German gas need now is covered by Norway. “Norwegia made a crucial contribution to the success of the release so quickly from Russian gas”, German Green Minister Habeck stressed in Oslo. But Norway has not helped, only in filling German gas deposits. Even the first floating terminals, which are bringing liquid natural gas to Germany, bear the Norwegian flag.

Meeting Germany's acute energy needs is only one side of the medal. The other side concerns a major energy investment in Norway for the future. Norway has the interest to gradually shift from gas and oil suppliers to hydrogen suppliers to Germany and Europe. “This is a unique chance, to build a hydrogen industry in Norway”, Norwegian energy concert President Equinor Anders Opedal said in Oslo on Thursday. Such a unique chance for Norway opens because Europe's largest economy, Germany has an interest in importing this hydrogen to its industry.

“We build a functioning hydrogen market”

Norway's Prime Minister Jonas Gahr Stére said after meeting with German minister that “we know hydrogen has special significance for Germany, in transition” towards green energy.) Therefore, he said, “we are making the joint statement here that we will build a functioning hydrogen market with Norway as part of this value added chain”.

A market for hydrogen is created only with systems that actually use it, Habec said. “Should be clear that a new system is really coming”. He said the decision was made. “Let's do it. ”

The German subkancellar stated in Oslo that if it becomes a hydrogen exporter, Norway could become a stable part of the German power supply, as Germany imagines. Germany's goal is to break free from fossil energy within 22 years until 2045. Habeec recalled that “Norwegia, which has built its economic wealth with oil and gas, will change, should be decarbised. ”

A key point of partnership between Germany and Norway will be the construction of a hydrogen supply pipeline between the two countries. By 2030, coal, in Germany's energy supply, will be replaced mainly by hydrogen, German Minister Habeck said. There are also plans to invest in gas power plants, which can work with hydrogen as well. Habecku said that “this hydrogen can and should be supplied by Norway”.

Norwegian Prime Minister Jonas Gahr Stére did not hide his satisfaction with future business. “This is a time when Germany has never been more important to Norway”, he said.

World Energy Market Before Change

Norwegian enthusiasm for German bid to develop the hydrogen industry comes when the world energy market stands before a deep reconfiguration. This has to do with China's intention to significantly enhance its role in the energy market. Some experts believe China is targeting a new world energy order.

This serves China's recent decision to drastically increase oil and liquid natural gas purchase in the next three to five years by leading owners of the world's oil and gas reserves. They are Iran, Venezuela, parts of Africa Russia and the Gulf Co-operation Council countries (GCC). These China deals more and more in its Chinese currency. Hoping that “petrodolaar” will gradually be replaced by “Financial Times analysts say China's control over more energy reserves and related products could have new consequences, such as. to affect rising inflation in Western countries. So not only Norway, but all of Europe is interested in regionalising markets, working to create a multipollar energy market.

War in Ukraine and the Volkswagen Decision

Eastern Europe is another example of the fact that German investments and market delivery from Germany can significantly affect the country's exporting economy.

Four Southeast European countries compete as they become the beneficiary of a major investment in German automobilic concert, Volkswagen. In March 2021, the VW announced that one of the six car batteries plants would build in Eastern Europe. As investment countries, Chekhia, Poland, Hungary and Slovakia are under discussion.

This statement was made before the war in Ukraine. Since the outbreak of war in Ukraine, energy prices in Europe have risen further, making currently many investors hesitate to invest.

On December 9th, Volkswagen said that in the current situation he would postpone the decision on where the factory will be built.

When you have the opportunity to build a battery factory in Europe, where electricity costs 15 euro cents per kilowatt hours, and when in China or America it costs 2-3 cents, we can't say in the interest of the shareholders we're going to do here for solidarity”, the trading logic chief of Concern V explained. W, Thomas Schäfer.

This statement was largely experienced in Czechia, where politics has declared the attraction of German investment a top priority. This is because the Czech automotive industry sees this investment crucial to its future, and especially for its great hope, the transition in electric vehicles.

Special Pilsen-Line Airport in Czechia was recently mentioned as a concrete location for the VW battery factory in Eastern Europe. According to Skoda, the daughter of VW, this country would be the only place where the Volkswagen demands can be technically fulfilled”.

This plant would bring employment of at least 4,500 new workers for the Czech automotive industry, which provides 10% of Czech GDP and 25% of the country's exports.

The VW signalled that it has not withdrawn the decision, but will not rush the European country's appointment of the battery factory. Meanwhile, some French media remind the Czech Republic that the fact that Germany is also the market for a third of the Czech industrial production makes the Czech industry very dependent on Germany. / DW