Climate and energy stumbling blocks for the 2021 German coalition talks
Climate and energy policy could emerge as a major stumbling block in the upcoming negotiations. All leading parties made it clear after the 26 September general election that a comprehensive reform of Germany’s climate policy would have to be a cornerstone of the next government, but the approaches to turning ambition into action vary widely.
The Greens have campaigned for regulatory changes, such as mandating an earlier coal exit than currently planned, an end date for the sale of combustion engine cars or a speed limit on motorways, and favour large-scale investment programmes to boost more climate-friendly technologies potentially financed with government debt or higher taxes. This directly clashes with the FDP’s key election promise not to raise taxes and generally exert fiscal discipline by not creating new public debt. At the same time, the FDP is strictly opposed to prohibitive rules and bans on specific technologies, advocating a market-based approach instead centred on carbon pricing.
“Worlds collide” on social and economic policy between the Greens and the FDP, said the Greens’ co-leader, Robert Habeck. The Social Democrats, meanwhile, are sceptical when it comes to an earlier coal exit or to raising the national carbon price on transport and heating fuels.
Still, some commentators see considerable potential for climate action and modernisation in a cooperation between the SPD, the Greens and the FDP. The key message of a ‘traffic light coalition’ should be that “ecology and freedom, climate action and market economy” can go hand in hand, Ralf Fücks, head of the think tank Center for Liberal Modernity, told the newspaper Tagesspiegel.
The key energy and climate policy stumbling blocks may include:
Experts agree that the climate-friendly transformation of Germany’s economy hinges on access to sufficient supplies of renewable energy. In the case of Germany, this could come almost exclusively from wind and solar sources. All parties agree that a massive renewables rollout is needed, but they are at odds over state support.
- does not specify expansion targets but calls for a “decade of determined renewables expansion”;
- wants 100 percent renewable power by 2040;
- wants to abolish renewables levy by 2025 and instead pay support from the federal budget, also using CO2 price revenues;
- Scholz has said he aims to legally define electricity need 2045 to then align expansion targets with this.
- want 100 percent renewable power by 2035;
- propose ambitious expansion targets: onshore wind expansion: at least 5-6 GW p.a. immediately, 7-8 GW p.a. from mid-2020s, offshore expansion: 35 GW by 2035, solar expansion: 10-12 GW p.a. immediately, 18-20 GW p.a. from mid-2020s;
- want to use two percent of the country's surface area for renewables generation.
- calls for market-based expansion helped by rising CO2 price; aims to end support through EEG;
- opposes legally binding expansion targets for individual technologies.
Following a landmark climate ruling by the German federal constitutional court, the outgoing grand coalition government this summer raised Germany’s greenhouse gas reduction target for 2030 and pulled forward the goal of reaching climate neutrality to 2045. It is unclear whether a new government would raise the targets even further, as only the Green Party calls for this in its manifesto.
- sticks to the agreed targets – climate neutrality by 2045;
- 65 percent emissions cut by 2030;
- Scholz called these targets the “most ambitious currently feasible in an industrialised country”.
- want to raise the 2030 target to at least 70 percent greenhouse gas reduction;
- say Germany has the chance to be climate neutral “in 20 years” [~2040].
- manifesto mentions climate neutrality by 2050, unclear how firm the party is on this;
- will re-evaluate the 2050 target once the full IPCC AR6 is out in 2022, the parliamentary group’s climate spokesperson Lukas Köhler told CLEW in an interview.
Tighter emission targets and the unmistakable signs of climate change once again turned Germany's coal exit into a hotly debated election campaign issue. The country agreed last year to phase out coal by 2038 at the latest, but many analysts, politicians and activists say Germany must quit the most carbon-intensive fossil fuel much earlier to achieve the emission cuts it now envisages. Meanwhile, the market conditions for coal-fired power plants have worsened due to rising CO2 costs, undermining their profitability. Almost all major parties in Germany have now signalled their willingness to end the technology well before the farthest end date agreed, but the question is whether an earlier end date should be mandated by law or whether the market forces themselves could push coal out by around 2030. Support for the coal regions is also a major question.
- In vague statements, Scholz said he stands by the coal exit agreement but would prefer an earlier exit;
- sufficient renewables expansion a prerequisite;
- SPD MP Johann Saathoff told CLEW he is open towards an earlier regulated coal exit.
- want coal exit by 2030;
- say planned reform of the ETS will make 2038 coal exit date “obsolete”;
- say agreed coal exit “extremely well financed, with generous support for the regions and the employees”.
- does not see the need for a regulated end date, says ETS will do the job;
- calls for right energy sector framework to ensure supply security as coal is phased out;
- says support for workers only area where state regulation is necessary.
National CO2 price on transport and heating fuels
Many economists and climate researchers argue that raising the national carbon price on transport and heating fuels faster than currently planned is essential to reaching new, higher climate targets in both sectors. The debate about a possible increase became a key issue in Germany’s election campaign, because it would inevitably lead to higher prices for petrol or heating oil – hurting citizens’ wallets and affecting their day-to-day lives.
- sticks to price path already agreed in law, “the price must rise moderately,” said Scholz;
- says it is important for planning security;
- wants to examine per capita bonus to return revenues from CO2 price to citizens; wants landlords to cover extra costs of CO2 price in heating.
- aim for faster rise of CO2 price (to 60 euros by 2023);
- want to use the CO2 price revenues to lower the renewables levy and introduce a per capita reimbursement (“Energiegeld”);
- plan a climate bonus fund to support the switch to public transport or to emissions-free cars for low-income commuters;
- say homeowners must pay CO2 price in heating to make sure it has a steering effect.
- wants market-driven CO2 price through emissions trading as soon as possible in all sectors, MP Köhler says market-driven means it could also reach high levels like the 60 euros proposed by the Greens; plans annual per capita “climate dividend” for citizens from CO2 price revenues.
Combustion engine car ban & speed limit
Germany's election campaign added fuel to the debate about whether combustion engines have a future in the birth country of the automobile and whether a general speed limit should be introduced on its famed autobahns. Given the size and status of Germany's car industry, these and many other steps on the way to sustainable mobility are hotly contested within politics, the industry and society.
- wants 130 km/h speed limit on motorways;
- Scholz says “not a friend” of combustion engine car ban;
- carmakers already decided on e-mobility, want 15 million e-cars on German roads by 2030.
- want only emission-free car registrations from 2030;
- "ICEs have no future";
- want 130 km/h speed limit on motorways.
- rejects regulated end date for combustion engine;
- rejects speed limit;
- rejects driving bans.
A way out: Let Brussels decide
Compromises on many of these issues will form part of the bigger negotiation package with some horse trading involved along the way. However, on some contentious issues the parties could opt for another way out by referring to decisions at EU level.
The EU’s climate and energy policy has set comparatively strict guidelines for the future German government’s plans. EU member states and the European Parliament are currently discussing the Fit for 55 package – a comprehensive package of reform proposals for almost all major energy and climate laws. It includes stricter CO2 limits for passenger cars and the call to phase out new combustion engine car registrations by 2035, which could make German national regulation unnecessary. Many experts also say that the planned more ambitious greenhouse gas reduction targets and the reform of the emissions trading system (ETS) will push coal effectively out of the market by 2030.
Thus, the coalition partners could end up agreeing to “Let Brussels decide.“