_ J.C. Kofner, Economist, MIWI Institute for Market Integration and Economic Policy, Munich, January 10, 2025.
Summary
Affordable natural gas from Russia was a cornerstone of the competitiveness of German industry for many years. The decision to avoid Russian gas and transition to more expensive LNG from the United States has led to an artificial dependency on imports and contributed to deindustrialization. However, Germany possesses vast unconventional natural gas reserves that could meet the country’s gas demand for over 35 years. With a gas price of €50 per MWh, fracking becomes economically viable—a threshold likely to be reached in 2025. The energy policies of the U.S. under Donald Trump demonstrate that even a highly developed industrial nation can ensure autonomous raw material supplies. Contrary to the green lobby’s false claims, surveys reveal high societal acceptance for domestic natural gas production in Germany. Studies also confirm the high safety standards and environmental friendliness of modern fracking techniques. Therefore, regulatory adjustments and fiscal incentives are required to promote domestic natural gas extraction, making the German economy more independent and competitive in the long term.
Historical Significance of Russian Natural Gas
From the 1970s until 2022, inexpensive natural gas from Russia served as a central pillar of the competitiveness of German industry. This energy source enabled low production costs and provided Germany with a significant competitive edge.[1]
In 2024, Germany’s annual gas consumption stands at 835 TWh, with only 4.8% of this demand being met by domestic production (40 TWh). This marks a sharp decline compared to 90 TWh in 2014, a direct consequence of fossil-hostile policies by successive “green” federal governments.[2]
Artificial Dependency on the United States
By deciding to cease importing Russian pipeline gas, Germany’s gas needs in 2024 were met 45% by Norway and another 45% by the U.S. Remarkably, 91% of Germany’s LNG imports originate from the U.S.[3] This LNG, according to OMV, is twice as expensive as Russian pipeline gas.[4] The resulting economic dependency on the U.S. imposes significant additional costs on consumers and businesses. This policy reflects a transatlantic subservience by the German government, contrary to the interests of the German economy.
Potential and Economic Viability of Domestic Natural Gas Reserves
Germany’s known conventional natural gas reserves total 17.5 billion cubic meters (187.3 TWh), while probable reserves amount to 35.6 billion cubic meters (381 TWh).[5] Together, these reserves would only cover 46% of the annual gas consumption. In contrast, immense unconventional natural gas reserves, contained in domestic coal seams and shale formations, are estimated by the Federal Association for Natural Gas, Oil, and Geoenergy e.V. to exceed 2.75 trillion cubic meters.[6] This corresponds to an energy content of 29,425,000 TWh, sufficient to meet Germany’s gas demand for over 35 years.
The costs for extracting fracking gas in Germany range between €26 and €43 per MWh, according to the Institute of Energy Economics at the University of Cologne (EWI).[7] The Center for European Economic Research (ZEW) estimates that fracking becomes economically viable when the gas price exceeds €50 per MWh.[8] By early 2025, the European wholesale gas price was already at €48 per MWh, bringing the viability of domestic gas production within reach.[9]
U.S. Energy Policy as a Benchmark
The energy policies of the U.S. under Donald Trump demonstrate that even a highly developed industrialized nation can autonomously manage its raw material supplies. Since 2016, the U.S. has been a net exporter of natural gas, covering 116% of its demand through domestic production.[10] As a result, industrial gas prices in 2023 were only €13 per MWh in the U.S., compared to €78 per MWh in Germany.[11]
The consequences are significant: Since 2017, German industrial production fell by 15.2 percentage points, while U.S. industrial production grew by 3.1 percentage points.[12] In 2024, the U.S. achieved GDP growth of 2.8%, whereas Germany’s GDP shrank by 0.2%.[13] These figures underscore that affordable natural gas is an essential foundation for industrial competitiveness.
Societal Acceptance and Environmental Safety
According to a representative survey by the Federal Association for Natural Gas, Oil, and Geoenergy (BVEG), 70% of Germans support the development of domestic natural gas reserves, while only 1% advocate for complete import dependence. Key arguments for domestic production include import independence, price stability, and high environmental standards.[14]
Environmental concerns about fracking in Germany are unfounded. Ninety-nine point four percent of Germany’s natural gas reserves are in Lower Saxony, where, according to a response from the state government to a query by Omid Najafi, MdL (AfD), no lasting environmental impacts from natural gas production have occurred since 2013.[15]
The chemicals used in fracking belong to the lowest water hazard class, are non-toxic, and require no labeling under chemical regulations. Their concentration is so low that the fluid is not classified as toxic or environmentally hazardous under German environmental law. Extensive studies by the National Academy of Sciences (Leopoldina) and the German Academy of Science and Engineering confirm that there is no evidence worldwide of contamination of near-surface groundwater from frac fluids or reservoir water.[16] Fracking has been used for decades in Germany without environmental damage.[17] Legalizing fracking under strict German environmental regulations would ensure the highest safety standards.
Regulatory Reforms as a Prerequisite
Current legal frameworks hinder both conventional and unconventional natural gas extraction in Germany. While other EU countries like Poland successfully practice fracking, Germany’s Federal Mining Act (BBergG) and Water Resources Act (WHG) prohibit the use of this technology.[18] Natural gas is classified as sustainable in the EU taxonomy.[19]
The Leopoldina recommends legalizing fracking and reducing approval processes to five years.[20] Additionally, Germany could adopt the provisions of the European Critical Raw Materials Act (ECRMA), which limits the maximum approval period for domestic extraction of strategic metals to 26 months.[21] Adjustments to the BBergG and WHG are essential to enable fracking and facilitate conventional extraction, thereby securing Germany’s energy supply sustainably.
During Donald Trump’s first term, tax support for fracking and natural gas production in the U.S. was significantly expanded through tax relief and the relaxation of environmental regulations. The “Tax Cuts and Jobs Act” of 2017 lowered corporate taxes and introduced tax incentives and depreciation options, such as immediate deductions for exploration and production costs, reducing companies’ tax burdens. These benefits apply not only to fracking but to the entire fossil fuel industry.[22]
A similar model in Germany could ease natural gas production. Tax incentives for technological investments, reduced environmental regulations, and infrastructure support measures could secure national energy supplies, lower costs, and create new jobs.
Conclusion: The Urgency of Self-Sufficiency
Germany’s self-sufficiency through domestic natural gas production via fracking represents a strategically and economically sustainable solution to the energy crisis. It would reduce dependence on the U.S. and other import nations while ensuring the long-term competitiveness of German industry. The data speaks for itself: Germany can and should rely on its hydrocarbons to strengthen its economic future and achieve greater independence.
References:
[1] Mehren M. (2020). Trotz Gegenwind: Eine historische Energiepartnerschaft. Ost-Ausschuss der Deutschen Wirtschaft. URL: https://www.ost-ausschuss.de/de/trotz-gegenwind-eine-historische-energiepartnerschaft
[2] BDEW (2024). Die Energieversorgung 2024. URL: https://www.bdew.de/media/documents/2024_12_18_Die_Energieversorgung_2024_Final.pdf
[3] BDEW (2024).
[4] TASS (2018). Russian gas is 50% cheaper for Europe than US LNG — OMV CEO. URL: https://tass.com/economy/1015850
[5] LBEG. (2024). Erdgasreserven in Deutschland nach Bundesländern zum Jahresbeginn 2024 (Rohgas in Milliarden Kubikmeter). Statista. Statista GmbH. Zugriff: 10. Januar 2025. https://de.statista.com/statistik/daten/studie/232466/umfrage/erdgasreserven-in-deutschland-nach-bundeslaendern/
[6] BVEG (2023). Erdgasreserven und Potenziale in Deutschland. URL: https://www.bveg.de/die-branche/erdgas-und-erdoel-in-deutschland/erdgasreserven-in-deutschland/
[7] Riedel. T. et al. (2017). Analysis of the Potential Economic Viability of Shale Gas Resources in Europe. ewi Köln. URL: https://link.springer.com/article/10.1007/s12398017-0210-2
[8] Flues F. (2013). Fracking in Europa lohnt erst bei deutlich höheren Gaspreisen. ZEW. URL: https://www.zew.de/presse/pressearchiv/fracking-in-europa-lohnt-erst-bei-deutlich-hoeheren-gaspreisen
[9] Intercontinental Exchange. (2025). Dutch TTF gas futures at the beginning of each week from January 9, 2023 to January 6, 2025 (in euros per megawatt hour). URL: https://www.statista.com/statistics/1267202/weekly-dutch-ttf-gas-futures/
[10] IEA (203). Natural Gas in the United States. URL: https://www.iea.org/countries/united-states/natural-gas
[11] EIA. (2024). Average price for industrial natural gas in the United States in selected years from 1975 to 2023 (in U.S. dollars per 1,000 cubic feet). URL: https://www.statista.com/statistics/1383403/us-industry-sector-average-natural-gas-price/ | Bundesnetzagentur, Bundeskartellamt. (2023). Gaspreis nach Verbrauchergruppen in Deutschland in den Jahren 2011 bis 2023 (in Euro-Cent pro Kilowattstunde). URL: https://de.statista.com/statistik/daten/studie/154961/umfrage/gaspreis-nach-verbrauchergruppe-seit-2006/
[12] Federal Reserve. (2024). Monthly Industrial Production Index (IPI) of the United States from July 2019 to August 2024 (seasonally adjusted). URL: https://www.statista.com/statistics/1253646/us-monthly-industrial-production-index/ | Destatis (2025). Produktion im Produzierenden Gewerbe. URL: https://www.destatis.de/DE/Themen/Wirtschaft/Konjunkturindikatoren/Produktion/kpi111.html#355020
[13]Gern K.J. et al. (2024). Weltwirtschaft im Winter 2024: Im Zeichen wirtschaftspolitischer Unsicherheit. Kieler Konjunkturbericht, Nr. 119 (2024 | Q4). IfW Kiel. URL: https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ | Boysen-Hogrefe J. et al. (2024). Konjunkturbericht: Deutsche Wirtschaft im Winter 2024: Kein Aufschwung in Sicht. Kieler Konjunkturbericht, Nr. 120 (2024 | Q4). IfW Kiel. URL: https://www.ifw-kiel.de/de/publikationen/deutsche-wirtschaft-im-winter-2024-kein-aufschwung-in-sicht-33589/
[14] Brandtner J. (2024). Das denkt Deutschland über die Gas- und Ölförderung im eigenen Land. BVEG. URL: https://www.bveg.de/die-branche/das-denkt-deutschland-ueber-die-gas-und-oelfoerderung-im-eigenen-land/
[15] Niedersächsisches Ministerium für Wirtschaft, Verkehr, Bauen und Digitalisierung (2024). Energieversorgung in Niedersachsen mit einheimischem Erdgas (Teil 1). Anfrage der Abgeordneten Omid Najafi et al. (AfD). Drs. 19/5705. URL: https://www.afd-landtagsfraktion-niedersachsen.de/anfrage/energieversorgung-in-niedersachsen-mit-einheimischem-erdgas-teil-1/
[16] Gierds J. al. (2023). Fracking: eine Option für Deutschland? Chancen, Risiken und Ungewissheiten beim Fracking in nicht konventionellen Lagerstätten. Nationale Akademie der Wissenschaften Leopoldina, acatech – Deutsche Akademie der Technikwissenschaften, Union der deutschen Akademien der Wissenschaften. URL: https://www.leopoldina.org/publikationen/detailansicht/publication/fracking-eine-option-fuer-deutschland-chancen-risiken-und-ungewissheiten-beim-fracking-in-nicht-konventionellen-lagerstaetten-2023/
[17] BVEG (2022). Wie gefährlich ist Fracking?. URL: https://www.bveg.de/umwelt-sicherheit/buerger-fragen-uns/wie-gefahrlich-ist-fracking/
[18] Harper, J. (2023). Is Polish shale gas the answer to the EU’s energy shortage? DW. URL: https://www.dw.com/en/is-polish-shale-gas-the-answer-to-the-eus-energy-shortage/a-65190723
[19] Europäisches Parlament (2022). Taxonomie: Keine Einwände gegen Einstufung von Gas und Atomkraft als nachhaltig. URL: https://www.europarl.europa.eu/news/de/press-room/20220701IPR34365/taxonomie-keine-einwande-gegen-einstufung-von-gas-und-atomkraft-als-nachhaltig
[20] Gierds J. al. (2023).
[21] Bähr C. et al. (2024). Rohstoffsituation der bayerischen Wirtschaft 2024. IW Köln, vbw. URL: https://www.iwkoeln.de/studien/cornelius-baehr-thorsten-lang-thomas-okos-iris-richter-rohstoffsituation-der-bayerischen-wirtschaft-2024.html
[22] Trump, D. J. (2017). Supporting Hydraulic Fracturing Technologies to Protect Jobs, Economic Opportunity, and National Security. The White House. URL: https://trumpwhitehouse.archives.gov/briefings-statements/president-donald-j-trump-supporting-hydraulic-fracturing-technologies-protect-jobs-economic-opportunity-national-security/