Dispatch from Germany | May '25
*** Our weekly Dispatches provide an overview of the most relevant recent and upcoming developments for the shift to climate neutrality in selected European countries, from policy and diplomacy to society and industry. For a bird's-eye view of the country's climate-friendly transition, read the respective 'Guide to'. ***
Stories to watch in the weeks ahead
Stories to watch in the weeks ahead
- Merz government’s first 100 days: The highly anticipated arrival of Germany’s new coalition government under chancellor Friedrich Merz on 6 May has ended a six-month policy gridlock, finally allowing the country to move out of introspection and address a wide range of policy issues. Merz’s election as chancellor was greeted with relief by the country’s energy, industry, and environmental associations after an array of urgent policy questions was left unanswered due to the collapse of the previous government. Stakeholders now expect credible plans within the typical grace period of every new government’s first 100 days in office, which ends in mid-August.
- Energy price cuts: In his first government declaration, however, the chancellor largely shunned climate policy commitments. Instead, he underlined that his administration’s priority was to further bring down energy prices as part of efforts to revive Germany’s ailing economy – an approach that observers at Deutsche Bank called a “promising” adaptation to reality. The coalition government of Merz’s conservative CDU/CSU alliance and their coalition partner, the Social Democrats (SPD), had agreed on energy price cuts already before completing their negotiations. A first relief package that includes a power tax reduction to the European minimum and reforms for the labour market is expected in mid-July. But further planned cost relief measures, such as creating an industry power price, look set to take more time.
- Financing proviso: A priority for Merz’s new administration is to table a final budget for 2025 and a draft for the following year to financially underpin projects listed in its coalition treaty, many of which still hinge on funding decisions. Merz’s cabinet wants to decide a draft budget for 2025 by the end of June. Parliament could then negotiate and greenlight the proposal in September. The treasury, under SPD finance minister Lars Klingbeil, warned in a paper sent to all affected ministries that the government will have to make cuts across the board to finance new projects. This is despite its historic 500-billion-euro special fund for infrastructure and climate neutrality, details of which are still largely unknown. According to Merz and Klingbeil’s ministry, priorities for the fund are railway infrastructure, road bridge modernisation, increased energy supply security and lower power prices, digitalisation, and housing construction – while some smaller climate action support programmes could be terminated.
- Renewables “reality check”: The surprise nomination of Katherina Reiche as the new economy and energy minister has raised hopes among energy industry representatives that the sector now has a safe pair of hands to implement the energy transition’s next steps. However, while the conservative CDU politician repeatedly stressed the need for ambitious climate policies during her corporate career, her first announcements dashed hopes that she would uphold the previous government’s focus on renewables expansion. Instead, Reiche called for a “reality check” of the risks and costs of renewables integration. One of her first decisions was to begin a review of the electricity system’s transformation until the start of parliament’s summer break in mid-July to possibly adjust expansion targets and allow the power grid’s buildout to adapt. Anyone hoping for a return to conventional nuclear power in Germany was also left disappointed as Reiche insisted the topic would be off the table, despite her parties’ overtures to the technology on the campaign trail.
- Gas and CCS: How Germany navigates its continued use of fossil fuels is also seen as a focus of Reiche’s first weeks in office. Her ministry is already under pressure to launch auctions for new gas-fired power plants. The energy industry urged the minister to use a draft law of the previous government as a blueprint to quicken the process and ensure auctions can commence in early 2026 – after the country’s grid regulator (BNetzA) has prepared the tenders, which is estimated to take about half a year. The backup plants are seen as a prerequisite for completing the country’s coal phase-out. At the same time, Reiche said her ministry would “soon” present a new law on Germany’s options for carbon management solutions (CCS/CCU). Allowing carbon management as an additional tool in the fight against climate change was another project that temporarily fell victim to the previous government’s breakdown.
Last month in recap
Last month in recap
- Bumpy start for chancellor Merz: As the new chancellor has ringed in his term with a busy schedule across Europe and announced ambitious plans to reignite the German economy, the day of high drama in the Bundestag at Merz’s election could easily be forgotten. An unprecedented second round of voting in parliament was needed to close the ranks in the coalition of Merz’s conservative CDU/CSU alliance and the centre-left SPD to secure a majority for the new chancellor. Merz’s humiliating experience sent shockwaves through Berlin’s political circles and offered a glimpse into a scenario in which Europe’s biggest economy falls into political instability, while the far-right Alternative for Germany (AfD) cheered over the centrist coalition parties’ lack of unity. “I hope that the coalition from now on is seen as acting professionally and avoids internal mistrust,” Ursula Heinen-Esser, a former member of parliament for Merz’s CDU, told Clean Energy Wire.
- Climate Council warning: The unity of the new government looks set to face a first test in climate and energy policy after a warning by the country’s Council of Experts on Climate Change. The advisors found that the coalition agreement remains too vague on climate policy and “does not provide any significant impetus for achieving the 2030 target”. Any new government is required by law to present a comprehensive climate action programme, and environment and climate minister Carsten Schneider plans to do so by the end of the year. The council found that several key areas require urgent attention. These include emissions reduction in the transport and building sectors, which in 2027 will fall under the new EU emissions trading system ETS2 – for which the government has also been criticised by NGOs for lacking a strategy on how to ensure a just transition and moderate cost impacts for citizens. With climate policy being fully in the environment minister's hands again, Schneider must find common ground with his CDU cabinet colleagues, economy minister Reiche, and new transport minister Patrick Schnieder.
- Transport transition thrust? The nomination of Schnieder, a close internal party ally of chancellor Merz, is seen as a continuation of Germany’s reluctant approach to enforce difficult decisions in the key sector transport. As a cornerstone of the German economy, the car industry’s transition towards e-mobility has traditionally been handled with kid gloves by consecutive ministers – who nevertheless failed to provide companies with stability. The sector continues to lag most on greenhouse gas emissions reduction, while the number of EVs on the road remains far behind initial ambitions. With the collapse of Tesla sales across Europe, German brands are seeing a chance to regain lost ground. However, selling more electric Volkswagen will not be enough to cut Germany’s transport emissions, which is why Schnieder has been implored by several NGOs to commit to sustainable local and regional transport in his first 100 days in office.
- Iberian outage’s shockwaves: The massive blackout in Spain and Portugal on 28 April reverberated far beyond the Iberian Peninsula, as the energy sector’s fears of an extended and nationwide outage in a modern power system became reality. While the exact causes continue to be investigated by European experts, a debate was triggered in Germany about whether the country could itself face a blackout. Germany’s grid regulator BNetzA quickly and confidently reassured that a similar system collapse was unlikely thanks to the country’s solid integration in the European compound system. But researchers have cautioned that further preparation measures are needed to increase supply security. “One hundred percent security cannot be achieved here either,” the energy experts said, and warned that the lack of so-called inertia in the grid due to a high share of renewables remains an important avenue of investigation.
Benjamin’s picks – Highlights from upcoming events and top reads
Benjamin’s picks – Highlights from upcoming events and top reads
- No running away from climate change: It’s always great to see passion coincide with profession, which is what happened in the past week when my colleague Carolina Kyllmann visited the Climate Adaptation and Sports conference, co-hosted by the German Olympic Sports Association (DOSB) and the German environment ministry (BMUKN). At the conference, avid ultra runner Caro found that climate change effects in sports go far beyond athletes' heat stress – and probably also lots of inspiration for future CLEW projects that link athleticism with atmospheric heating.
- Ex machina: Another colleague who was able to pursue a passion at work in recent weeks was Sören Amelang, who channeled his talent for spotting scientific breakthroughs into a new CLEW package on future technologies that could become staple assets in humanity’s battle against global warming. In the first instalment, you may learn that a seemingly established procedure such as CCS is still a long way from becoming a sizeable aide in climate action. In next week’s article, you can read about how nuclear fusion may be a more realistic solution than many believe.
- Shrink about it: Sören put the package together with the help of our wonderful intern Bennet. On his last day before leaving the CLEW news room after spending three months with us in Berlin, the aspiring engineer reminded everyone that even the worst man-made crisis of our times deserves a light touch – and that we should consider more drastic individual steps to curb climate change, such as shrinking our own bodies to a more sustainable size to reduce our resource consumption.
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