In the first weeks of December, speculations about the proposals of the Poland-Germany agreement appeared in the media, which would end the dispute over the controversial Nord Stream 2 project – writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.
Lex Nord Stream 2 worries the Germans
It is about the gas pipeline from Russia to Germany, which would be created by the end of 2019 in the Baltic Sea. Its capacity is expected to reach 55 billion cubic meters. It would be the second gas mains from Russia in the Baltic Sea. Together with the existing Nord Stream 1, it would allow to direct up to 80 percent of deliveries to Europe to one route.
Proponents of the project argue that it will provide cheap gas without intermediaries. Opponents warn that it will strengthen the position of Russian Gazprom in Central and Eastern Europe, threaten alternative projects for non-Russian gas and block the development of the market. Germans claim that this is a pure business venture, which does not prevent their Minister of Foreign Affairs from defending the project from critics. Poles, due to the deadlock in the European Council, are demanding the project to be covered by antitrust law of the European Union, which may at least delay it.
The German side does not agree with the initiative of the European Commission consisting in the revision of the gas directive to a condition that will allow for the inclusion of Nord Stream 2 antitrust regulations. Critics of this decision warn that it would allow for the relativization of EU law in favour of the Russian Gazprom, which is the operator of the project. Proponents remind that this type of arrangement will require time-consuming negotiations with Russia, which may delay the implementation of the project. Poles, despite the principled defense of the omnipotence of EU law over Nord Stream 2, have agreed to a concession and support the negotiation proposal. Germans reject it, remaining in consistent criticism with Gazprom.
Two media speculations appeared in this context about Berlin’s possible proposals that could convince Poles to abandon resistance. The first is the Nord Stream 2 system for coal. – Germans will agree to less restrictive regulations for coal-fired power plants if Poland stops pushing for a change in EU law that may block the construction of a submarine gas pipeline from Russia to Germany – writes Rafał Zasuń from the portal WysokieNapiecie.pl.
Nord Stream 2 for coal
On 18 December, the ministers responsible for energy in the EU countries are to adopt a position on the winter package. It is a series of solutions for the energy sector, which – generally speaking – harass coal energy. Poland sought to ensure that support mechanisms such as the power market could cover power plants emitting more than 550g CO2/kWh during the transitional period beyond the 2025 proposed by the Commission. An agreement with Germany could make this proposal real.
However, it is not known whether the concession regarding the gas directive would guarantee that Poland will obtain a favourable solution as part of the winter package. In the past, the coupling of discussions about energy and climate ended with losses for Poland. An example may be the initiative of the Energy Union initiated by Poles with the accumulation of postulates in the field of energy security, and eventually was converted with the participation of, e.g. Germans in the system promoting climate policy and renewable energy.
We also do not know if Poland needs any further concessions in the winter package talk. WysokieNapiecie.pl itself indicates that the agreement negotiated so far has satisfied the power sector. Poland has already received notification of the Power Market Act and a guarantee that power plants with contracts will maintain support for fifteen years. Only further German concessions, who does not have full control over other supporters of ambitious climate policy, could be interesting for the Polish side.
Nord Stream 2 for reparations
Another speculation is Politico’s reports that Germans could abandon the construction of Nord Stream 2 in exchange for the fact that Poland will not apply for war reparations. Due to the fact that no legal basis for the fight for reparations has been found yet, which is admitted by the Polish Ministry of Foreign Affairs, this arrangement should be considered unlikely. It is difficult to suspect the Germans of not knowing the law. Alternatively, Germans could acknowledge that Polish demands are at least partially justified and may strike their budget. However, this is pure speculation.
Politico claims that the proposal to abandon Nord Stream 2 appeared after the beginning of negotiations on the formation of the Christian Democrats, Green Party and Liberals government by Angela Merkel. Such a government could theoretically abandon Nord Stream 2, and use its intention as a concession in negotiations with the Poles. However, it turned out that the alliance had no chance, the talks ended in failure and it is possible to return to the coalition of the Christian Democrats with the socialists, who historically did not block Nord Stream 2. It is not known whether the German offer was on the table at all, or – if so – whether it is still on. In my opinion, it is difficult to treat this speculation seriously, as far as the risk of a coalition which is hostile to this controversial project was not replaced by, for example, risk of blocking the project with US sanctions that Berlin may anticipate.
Is the game worth the effort?
If the aforementioned test balloons are not just speculation, then the possibility that Berlin may take into account the scenario in which Nord Stream 2 cannot arise is: through resistance in Europe, US sanctions, Gazprom’s financial problems, or all these threats at once. Another indication would be information for Gazprom’s shareholders, in which there was no mention of Nord Stream 2, about which I have already written.
If the proposals from Germany are something more than speculation, they should be interpreted as recognition that the Polish efforts to apprehend Nord Stream 2 have been appreciated. Even if they do not block the project, they have become popular in Europe and may harm German interests. The agreement with Berlin is permissible only on the condition that it will bring a greater good to Poland, i.e. a chance for a gentle transformation for the coal sector that goes beyond the previously agreed concessions or resignation from Nord Stream 2.
Today, the vote of ministers responsible for energy in the case of Lex Nord Stream 2 will take place. It will be a test in the Berlin-Warsaw game. Will the test balloons sent by our neighbors meet with a positive response from the Ministry of the Three Crosses Square?