Germany’s gas dependence: An energy security risk / Chapter 1
Germany's gas dependence weakens its energy security
Key findings
Germany's dependence on US liquefied natural gas (LNG) has deepened in recent years, with about 92% of its LNG imports sourced from the US in 2025.
Gas demand uncertainty may disrupt Germany’s plans to almost triple its LNG import capacity by the end of 2028.
Germany’s gas consumption peaked in 2021. Household gas consumption fell by 23% between 2021 and 2024, thanks in part to the installation of heat pumps, which helped reduce spending on LNG imports.
Germany can boost its energy security and protect consumers from volatile gas prices by further reducing gas consumption.
Geopolitical issues, global conflicts and price volatility, among other factors, have constantly threatened Germany’s energy security in recent years. The more the country depends on imports of pipeline gas and liquefied natural gas (LNG), the more these events affect its energy market. However, Germany can reduce this dependence by further curbing gas consumption, installing more renewables and increasing energy efficiency measures.
In 2010, Russia was the EU’s largest gas supplier, accounting for 34% of the bloc’s gas imports (counting both pipeline gas and LNG imports). That dependency grew further as production from EU gas fields declined. Europe’s connection with Russia’s gas network expanded over the years through pipeline routes to Western Europe and Balkan countries. By 2020, Russia supplied an estimated 48% of total EU gas imports.
In 2021, Russia exported about 150 billion cubic metres (bcm) of gas to European markets via four major pipeline routes: Ukraine, Poland (Yamal-Europe), the Baltic Sea (Nord Stream), and the Black Sea and Turkey (TurkStream). Germany accounted for around 55% of those imports.
Russia supplied about 52% of Germany's gas imports in 2021. This figure declined to 22% in 2022, following Russia’s full-scale invasion of Ukraine earlier that year. By the end of September 2022, Russian pipeline gas stopped flowing to Germany.
As Germany pivoted to LNG, it opened its first floating storage and regasification unit (FSRU) for receiving the fuel in November 2022. Cargoes began arriving a month later. LNG represented 7% of Germany’s total gas imports in 2023, rising to 10.3% in 2025.
Since Germany began importing LNG, the US has been the main supplier. Germany’s dependency on US LNG continues to deepen, as imports from the country rose by 51% in 2025. Germany sourced around 92% of its LNG imports from the US in 2025.
Germany’s energy security was at risk in 2022 as more than half of its gas imports were from one source, Russia. Four years later, the country might be facing a potentially high-risk new geopolitical dependency on US gas.
Norway is now Germany’s main gas pipeline supplier, followed by the Netherlands and Belgium. Germany also transits gas to neighbouring countries, mainly Austria, Czechia and Switzerland.
Electrification of heating key to decline in household gas consumption
Germany’s gas consumption peaked in 2021, dropped by 15% in 2022 and remained relatively flat in 2023, 2024 and 2025.
Eurostat provides an in-depth look at gas consumption by sector, with data currently available through 2024. According to this data, the largest categories of German gas consumption in 2024 were: gas used for utility electricity and heat generation, at 29.4%; household consumption, at 28.6%; the industry sector, at 27.3%; and commercial and public services, at 11.8%.
IEEFA analysed the changes in demand within each of these categories between 2021 and 2024. In that period, gas used for utility electricity and heat generation increased by 1%, household use decreased by 23%, industry use decreased by 21%, and commercial and public services use decreased by 26%. This decline in household gas consumption was in part due to the electrification of heating.
Heat pumps and other clean energy alternatives for heating, such as solar water and space heating, have been displacing gas boilers in German homes. The installation of heat pumps and solar heating was an important factor in the reduction of gas consumption by households in Germany between 2021 and 2024. Other factors like weather and demand destruction caused by high gas prices also contributed to this decline.
Germany enacted a heating law in 2023 that aimed to phase out fossil fuel heating systems. Germany’s heat pump sales reached 236,000 units in 2022. After a record year in 2023 of 356,000 units, heat pump sales fell to 193,000 in 2024. In 2025, heat pump sales increased again, reaching around 299,000 units sold, topping gas boilers in the country for the first time.
Germany’s Federal Funding for Energy-Efficient Buildings programme has provided financial support for efficiency and renewable heating in the building sector. From January 2021 to September 2024, the scheme supported the installation of 303,242 heat pumps, 145,327 biomass heating systems and 905,456 square metres of solar thermal systems. The cost of the programme for this period was €10 billion.
IEEFA examined how the decline in household gas demand in recent years helped reduce the need for LNG imports to Germany. Based on analysis of gas market data, IEEFA assumed that any marginal increase in imports would have been from LNG, rather than from pipeline imports from Norway or other parts of Europe.
Germany installed almost 1.1 million residential heat pumps from 2022 to 2025, which reduced cumulative gas demand by around 40 terawatt-hours in that period.¹ IEEFA concludes that if this number of heat pumps had not been installed, Germany would have had to increase its LNG imports by around 16% in the last three years and would have had to pay an additional €1.3 billion total for importing LNG.²,³ US LNG accounted for 82% of Germany’s LNG imports in 2023, 90% in 2024 and 92% in 2025. Thus, around €1.2 billion of the €1.3 billion would have been spent on US LNG.
It is important to note that these savings are ongoing, and will replicate in subsequent years, because replacing gas demand with clean energy infrastructure (like heat pumps or solar thermal) generates compounded savings over the entire lifespan of the equipment.
Gas network overview
Germany’s gas transmission network is approximately 40,000km long. It is divided into a high-calorific gas (H-gas) and a low-calorific gas (L-gas) transport network. Germany has 16 gas transmission system operators (TSOs), more than other European countries due to private companies participating in the market. These operators manage cross-regional gas transport and gas transit to neighbouring countries. Germany also has 700 regional gas distribution network operators.
The country’s gas market is interconnected with Austria, Belgium, Czechia, Denmark, France, Luxembourg, the Netherlands and Poland by land and with Norway through the North Sea via multiple pipelines.
A group of TSOs own Trading Hub Europe, Germany’s gas market coordinator. It is a major gas trading point due to its central location in Europe and high volume.
Germany’s Federal Network Agency sets German gas TSOs’ regulated revenues through an incentive regulation system. This system sets a revenue cap for each TSO based on its necessary operating costs, efficiency and an allowed rate of return, aiming to ensure TSOs remain efficient and do not make monopoly profits. The revenue cap is determined for each five-year regulatory period and is based on a cost examination that includes efficiency benchmarking.
Gas network investments
In 2015, Germany’s Federal Network Agency listed 84 measures to expand the country’s gas infrastructure as part of the Gas Network Development Plan. The agency said the investment volume for these measures would increase to a total of €3.3 billion by 2025.
Germany has invested in the gas network to enable bidirectional flows in some pipelines and diversify gas supplies. In 2018, Belgian TSO Fluxys completed a project enabling bidirectional gas flows at the TENP pipeline, which links Germany with Switzerland, Belgium and the Netherlands. The investment connected Germany with Belgium’s Zeebrugge and France’s Dunkerque LNG terminals. In 2022, a technical upgrade at the Obergailbach point enabled gas to flow from France to Germany, supplementing the existing one-way flow from Germany to France.
Other pipelines with reverse flow capacity are Transitgas, which runs from Italy through Switzerland to Germany, and the Penta-West pipeline in Austria, which supplies gas to Germany and France, and enables flows from west to east.
Germany is currently focusing on building a national hydrogen core network by converting natural gas pipelines and constructing new ones to help meet its decarbonisation goals. But supply and demand for hydrogen are still uncertain.
Natural gas prices in Germany are not regulated but are determined according to supply and demand. Since these prices cover all costs associated with the expansion and maintenance of the natural gas grid, the Federal Network Agency should carefully monitor gas infrastructure investments to prevent unnecessary increases in consumer gas prices.
Accelerated LNG terminal buildout
After Russia’s full-scale invasion of Ukraine in February 2022, Germany rapidly decided to install several offshore and onshore LNG terminals and start importing LNG to replace the loss of Russian pipeline gas.
Since the end of 2022, Germany has installed five FSRUs, adding a total of 19.7bcm of LNG terminal capacity. IEEFA forecasts that this installed capacity will almost triple by the end of 2028, to 56.1bcm. But gas demand uncertainty may disrupt these plans.
State-owned company Deutsche Energy Terminal (DET) operates the Brunsbüttel, Wilhelmshaven 1 and Wilhelmshaven 2 LNG terminals. DET planned for the Energos Force FSRU to start operations in 2024 at the Stade terminal. However, following delays to the facility’s commissioning, the FSRU was sublet to Jordan in 2025.
German private terminal operator Deutsche ReGas operates the FSRU Neptune at the Mukran terminal. Deutsche ReGas also operated the Energos Power FSRU at Mukran from 2024. But it ended a contract with Germany’s government for the vessel in February 2025. The FSRU has since moved to Egypt.
Rising LNG terminal costs
In April 2022, the German government expressed plans to spend as much as €3 billion on LNG terminals over the following decade. By the end of 2022, the costs of those plans had more than doubled.
Cost estimates continued rising. By March 2023, Germany’s parliament had allocated €9.8 billion to support the country’s LNG infrastructure expansion between 2022 and 2038. The government said at the time that there would be additional costs on top of that amount.
The land-based Stade LNG terminal is expected to cost around €1 billion alone. It is planned for commissioning in 2027.
In July 2023, the European Commission approved a €40 million support measure for the construction and operation of Germany’s land-based 10bcm Brunsbüttel LNG terminal.
In December 2024, the European Commission approved a €4.06 billion grant to support DET operate four FSRUs in Germany. The measure covers the losses incurred by DET for operating the FSRUs until the end of their charter period. The Commission said the grant could rise to €4.96 billion if losses are higher than expected.
Deutsche ReGas cited DET’s “ruinous pricing policy” when announcing its decision in February 2025 to end its charter contract for the Energos Power FSRU. Deutsche ReGas said DET’s capacities were marketed at “significantly” below the cost-covering fees approved by Germany’s Federal Network Agency.
LNG contracting risks
Germany might have overbuilt its LNG regasification capacity as LNG imports have increased at a lower rate than initially forecasted. Germany’s LNG terminal utilisation rate in 2025 was 36.3%, below the EU average of 50.8%. Some of the country’s new terminals have been cancelled or delayed.
Nonetheless, the country still plans for LNG to play a key role in electricity and heat generation. German power utilities such as EnBW, RWE and Uniper continue signing long-term contracts and heads of agreements for LNG.
As Germany’s 2025 gas demand was nearly 13.5% below its average demand for 2018 to 2021, its LNG demand in the coming years might be much lower than the contracted LNG volumes.
German state-owned energy company SEFE (Securing Energy for Europe) has signed several agreements for LNG from different regions. Chemical company BASF signed a contract with Cheniere for US LNG in 2023.
If all of Germany’s current LNG import agreements materialise, the country would be contracted to import 26.2bcm of LNG in 2030 — almost three times its 2025 LNG import volumes — and 10bcm in 2045, when it aims to achieve greenhouse gas neutrality.
Regardless of these contracts, German efforts to reduce gas demand and scale up renewables deployment will boost energy security, even as the country aims to double down on using gas power plants as a backup for solar and wind.
The German government plans to support the construction of hydrogen-ready gas-fired power plants. The government’s initial proposals were to build up to 20 gigawatts of gas power capacity by 2030, but it has scaled this back to 10 gigawatts. The new power stations need to be carbon neutral by 2045. They could potentially feature carbon capture and storage. But the technical and economic challenges mean carbon capture is not a near-term solution for these assets.
The EU's REPowerEU plan to end its reliance on Russian fossil fuels helped enhance Germany’s energy security through diversification and demand reduction. But Germany’s continued reliance on gas and LNG imports threatens its energy independence.
Notes
¹ Calculation based on Eurostat database of disaggregated final energy consumption in households.
² IEEFA did not consider 2022 as Germany’s first LNG import terminal did not start operating until the end of 2022.
³ This calculation is based on the estimated average price that EU countries paid for LNG: €43.6 per megawatt-hour in 2023, €31.0 per megawatt-hour in 2024 and €35.7 per megawatt-hour in 2025. The source is IEEFA’s European LNG Tracker.