When the $11 billion Nord Stream 2 project was announced in 2015, it promised a brave new energy future for Europe. Criss-crossing under the Baltic Sea from western Siberia to make land in Germany, it assured Germany—and the tight-knit European energy market, through which natural gas supplies cross borders with ease—guaranteed supply. Nord Stream 2 was built to bypass Ukraine, in a move designed by Russia to add economic pressure to the country following a partial invasion of the country’s east in 2014. Russia’s gas supply contracts through Ukraine are up for renewal in 2024, and Russia seems minded to ditch them, and the supply to the country entirely. It wouldn’t be anything new for Russia, which has long used its position as the world’s energy supplier to threaten other countries.
But political expediency—and the need to ensure steady supplies of gas—trumped geopolitics and protecting Ukraine’s sovereignty. Europe’s domestic gas production was declining—dropping 9 percent between 2014 and 2015 according to the European Commission —and the continent recognized it needed to become more reliant on Russian gas imports. The project went ahead, and in the intervening seven years the vast pipeline was built beneath the Baltic Sea.
It all turned out to be a waste of time and money. Ahead of Russia’s full-blown invasion of Ukraine, launched in the early hours of February 24, the plans for Nord Stream 2 have been placed on ice. The big question is what that means for Europe’s energy security. “This is an inflection point,” says Thierry Bros, professor at Sciences Po, a university in Paris. “The crisis is a good wake-up call for Europe, and Europe’s naivety.” It’s also a blow to Russia, which relies on the income from gas and oil to support its own economy and, by extension, its war efforts.
At its peak, the 1,230-kilometer pipeline could supply 55 billion cubic meters of gas a year—a tenth of European gas consumption in 2021 alone. In the second quarter of 2021, the latest period for which European Commission data is available, Russia accounted for nearly half of gas imports into Europe, and Nord Stream, the twin predecessor pipe to Nord Stream 2, was the most important supply route of pipeline gas to the EU. And gas imports are vital for Europe: The continent imports three times as much gas as it exports, and twice the amount it produces domestically, according to International Energy Agency (IEA) data.
On February 22, Germany halted the process of certifying the pipeline, an important part of the process of bringing it onstream. A day later, the United States announced sanctions against the company overseeing the Nord Stream 2 project, as well as its leadership. Germany’s foreign minister, Annalena Baerbock, said on February 23 that canceling the Nord Stream 2 agreement, which would have helped Europe’s energy security, was a difficult decision to make. But it was important. “For us as the German government, it was important to show that for a free and democratic Ukraine, we are willing to also accept consequences for our national economy,” she told reporters. “Peace and freedom in Europe don’t have a price tag.”
While Baerbock said peace and freedom didn’t have a price tag, former Russian president Dmitry Medvedev was happier putting a number on the cost of shutting Nord Stream 2 down: “Welcome to the brave new world where Europeans are very soon going to pay €2,000 ($2,225) for 1,000 cubic meters of natural gas,” he tweeted. European gas prices rose 12.7 percent the next day to €927 ($1,030) per 1,000 cubic meters.
