Energy policy remains weak spot in Merz government's first year

One year after taking office, Germany’s coalition government under chancellor Friedrich Merz is struggling with low approval ratings and continuing economic difficulties, with energy policy seen as a key area where the coalition has yet to deliver convincing results. 

External shocks, including the tariff policies of the US government and the energy crisis triggered by the US- and Israeli-led war on Iran, have complicated the government’s work, while internal disputes between Merz’s conservative CDU/CSU alliance and the Social Democrats (SPD) have dominated headlines as the government marks its first anniversary. 

Both coalition parties have lost support in polls, falling well below their 2025 election results, according to a survey commissioned by broadcaster ntv. The CDU/CSU fell from 28.5 percent at the election to 22 percent one year on, while the SPD dropped from 16.4 percent to 12 percent. In a March survey, nearly 70 percent of respondents said they view the country’s energy policy negatively.

The government came to power with a promise to make energy more affordable for all consumers and inject new momentum into industry by cutting bureaucracy and relaxing regulation. One year on, households are still waiting for a promised electricity price reduction, while industrial and large commercial consumers have received a rebate and will enjoy a special industry power price. At the same time, the business climate index of economic research institute ifo in April 2026 reached the lowest level since 2020.   

Several major projects remain unfinished, including a reform of the country’s building decarbonisation law, the tenders for backup power plants and new rules for renewable energy support and electricity grids. “A lot is still hanging in the balance,” said the Süddeutsche Zeitung, pointing out that proposals by CDU economy and energy minister Katherina Reiche that are seen as potentially slowing the energy transition “quickly turned her into a hate figure for climate and environmental activists.”  

The Frankfurter Allgemeine Zeitung said Reiche’s focus on market-based solutions has isolated her even among fellow conservatives. Her stated goal is to make affordability and supply security the central pillars of energy policy rather than climate action, FAZ said, adding that her work is often seen as undermining coalition unity.  

NGO Germanwatch said chancellor Merz had broadly managed to defend Germany’s climate targets and the EU Emissions Trading System (EU ETS) against critics, but failed to rein in the “increasingly destructive” energy policy pursued by minister Reiche. Germanwatch urged the government to rethink its planned reliance on fossil energy imports amid the Iran war and instead focus on electrification and clean energy to ensure the country’s future competitiveness. 

The Association of German Engineers (VDI) said Germany’s energy policy lacks “determined implementation” of the necessary transformation towards a climate neutral energy system and that the entire transition is at risk of failing if no course correction is made.