German climate policy faces pivotal moment on 20 September
The German government has entered a pivotal week leading up to a possible watershed moment for the “Energiewende," the country's efforts to cut greenhouse gas emissions. Chancellor Merkel's conservative CDU/CSU alliance and coalition partner SPD are edging closer to an agreement on future climate policy one week before a 20 September due date for which the government has promised key decisions – just in time for UN Secretary-General António Guterres' Climate Action Summit in New York on 23 September.
The decisive climate cabinet meeting will coincide with the planned Global Climate Strike, the preliminary culmination of the Fridays for Future student climate protests inspired by 16-year-old Swedish activist Greta Thunberg. In Germany, the movement announced protests in more than 500 cities across the country, and many NGOs, scientists, business alliances and other groups, such as German service sector labour union Verdi, have said they will support the strike.
After years of booming renewables, Germany's planned transition to a low-carbon, nuclear-free economy – the famed Energiewende – has slowed in recent years. Emissions remain too high to reach climate targets, renewables expansion has slowed, and initiating changes in sectors such as transport has proven to be extremely difficult. Chancellor Merkel has therefore set up the so-called climate cabinet – a group of ministers with responsibilities in key climate policy fields – to decide necessary legislation to reach 2030 climate targets, as promised in the 2018 grand coalition government treaty.
Her move was also driven by rising public pressure for more ambitious climate action, following heat waves and the Fridays for Future student protests. These have caused the government parties to put a new emphasis on climate policy and present a myriad of proposals to fight climate change. Merkel called for an end to the government's piecemeal approach so far.
In her last weekly video podcast ahead of the crucial meeting, Merkel said: "Protecting the climate is a challenge for humanity. In order to meet this challenge, we need a real feat of strength." Of course, climate action costs money, Merkel added. "We don't need to beat about the bush."
Planned climate action measures could cost at least 40 billion euros over the coming four years, a source close to the parties' talks told news agency Reuters. Finance minister Olaf Scholz, however, said in an interview with public broadcaster ZDF that at the moment, “nobody can say anything about concrete sums”.
The climate cabinet has set itself a 20 September deadline. On that day, the ministers aim to decide on groundwork for a legislative package that is meant to ensure Germany reaches its 2030 climate targets.
German media observers still have doubts that Merkel will succeed in ending the piecemeal approach. The many proposals with which the coalition parties enter the final week of negotiations are "piecemeal squared", writes Michael Sauga in a column in German weekly Spiegel. The parties are hiding the fact that the planned introduction of a price on CO₂ emissions will make driving and heating more expensive "behind a barrage of fine words - and a conglomeration of further climate measures designed to distract from the actual reform," writes Sauga. "What they have in common is that they are either expensive or ineffective - or both at the same time."
What to expect on 20 September
"2019 will be the year of climate action, the year of decisions," said environment minister Svenja Schulze, speaking in the Bundestag, the national parliament, on 10 September. "This promise will be fulfilled on 20 September."
According to the official wording, the federal government aims to decide on "key features of a package of measures to ensure Germany reaches its 2030 climate targets" on 20 September. It will likely happen in the form of a federal cabinet decision and form the bedrock of the legislation and government programmes which the ministries will then work out by the end of the year. European regulations require Germany to finalise its 10-year national energy and climate plan (NECP) by 31 December 2019, laying out the details on how the country aims to help the bloc reach its 2030 targets. A first draft sent to the European Commission was criticised as incomplete, lacking the major decisions now promised for 20 September.
The climate cabinet faces the challenging task of resolving disputes and moulding proposals by government parties, their parliamentary groups and ministries into one joint programme. Thus, much will likely be decided in the days running up to the meeting. State secretaries from relevant ministries have met several times in recent months to prepare and take into account the sets of proposals each ministry delivered earlier this year.
As one example of dissent within the government, German media reported that the chancellery, finance ministry and environment ministry had raised doubts that a package of proposals sent by transport minister Scheuer would be enough to meet targets in the sector. Spiegel reported that Scheuer's ministry had refused to hand over its basis for calculation for external review.
A gathering of the grand coalition parties' leadership on 13 September did not resolve major remaining sticking points, such as a system for CO₂ pricing in transport and buildings, German media reported. The parties will meet again on 19 September.
For 20 September, one should not expect finalised details, but the package will include proposals for key climate measures and legislative reforms for all relevant economic sectors: energy, transport, buildings, agriculture and forestry and industry. What this means for existing and future laws will be worked out later.
"We are making climate-friendly behaviour simpler, cheaper and we will make climate-damaging behaviour more expensive and less attractive," said Schulze in parliament. "We are making it clear where the journey should go, namely towards climate neutrality by the middle of the century, by 2050."
Several cross-sector or overarching proposals are likely to become part of the package as well. The government looks set to decide on some form of a national CO₂ pricing system for transport and buildings, and a Climate Action Law as proposed by environment minister Svenja Schulze is also under consideration.
Where the coalition parties stand:
Days before the decisive climate cabinet meeting, the CSU was the first grand coalition partner which decided on and published what it called "a comprehensive climate action concept", followed by the CDU on 16 September. Several papers by the national party or the parliamentary group – leaked or officially presented – together with politicians' quotes also provide an indication of what the SPD wants.
Merkel's governing conservative CDU and its Bavarian sister party CSU say they want to decide on a joint concept ahead of the decisive climate cabinet meeting, with deputy parliamentary group leaders Andreas Jung (CDU) and Georg Nüsslein (CSU) in charge of development. A draft was leaked one week ahead of the climate cabinet meeting (see here for details). Jung said they would "closely link the process between parties, parliamentary groups and the government" and coordinate with state representatives and the climate cabinet.
The conservatives and Social Democrats then have to find compromise ahead of – and in – the climate cabinet meeting. Media reported the grand coalition partners did not resolve major remaining sticking points in a leadership meeting on 13 September, and plan to meet again on 19 September.
[Note: Find information on Germany's major parties in the blue info boxes throughout the text.]
CO₂ pricing and climate action law sticking points
Two main points of contention between Social Democrats and conservatives have emerged over the past couple of months.
The grand coalition partners agree that they want to introduce a national pricing system for CO₂ emissions in the transport and buildings sectors. However, while CDU and CSU support an emissions trading system, the SPD says it would take far too long to implement – and thus prefers a carbon tax. Conservatives have repeatedly rejected the introduction of new taxes, while SPD politicians like environment minister Schulze made clear they do not "cling" to any specific model. A CDU source told Clean Energy Wire that an emissions allowance system with an initially fixed price or an upper price limit that is quickly reached could be a way to create common ground. An unpublished joint CDU/CSU paper – seen by Clean Energy Wire – calls for a system with both a lower and an upper price limit in which those who bring fossil fuels into the market – such as petroleum companies – have to purchase the allowances.
Environment minister Schulze has emphasised that a CO2 price is no panacea. "In a mix of support programmes, regulatory law and other elements, the CO2 price is an additional instrument," Schulze told Welt am Sonntag.
The second dispute has been around Schulze's draft Climate Action Law. Schulze aims to introduce a single big framework climate law like in the UK to make climate targets legally binding. Her draft aims to divvy these targets up between economic sectors, as in the government's Climate Action Plan 2050, and make relevant ministries responsible for reaching them. The draft has been met with intense criticism from members of Chancellor Merkel's conservative CDU/CSU alliance. In her parliamentary speech, Schulze reiterated her call for a climate law, "including a control mechanism according to which we will check annually whether enough is happening in climate action”.
The Christian Democrats have been divided on how to tackle the climate issue. CDU head Annegret Kramp-Karrenbauer and her party have struggled to respond to the young generation's call for more climate ambition, exemplified by its clumsy response to a video by a 26-year old YouTuber. The party has since initiated an open "climate dialogue" in which it aims to collect members and voters' ideas. The CDU generally emphasises that ecologic measures to "preserve creation" must not threaten the competitiveness of German businesses, but opinions on how this can be reached have differed. However, two weeks ahead of the decisive climate cabinet meeting, Christian Democrats debated possible climate action plans in a day-long "workshop meeting", and the CDU leadership decided its own climate action concept on 16 September. The party rejected introducing a tax on CO2 and instead proposed setting up a national emissions trading system for transport and buildings, with an upper and lower price limit. Most conservatives share the fear of voter protests should the prices for petrol or heating oil go up – akin to the earlier yellow vest protests in France. The CDU also proposed a change in Germany’s core incentive for renewables investment: a step-by-step decrease of the levy power customers have paid for decades to finance state-guaranteed feed-in tariffs for renewables operators. The CDU will make innovation a centrepiece of long-term climate action, which could ensure German competitiveness globally. The conservatives have called for an even wider consensus on climate and said they want to include other parties in the process to ensure plans would survive legislative periods – and to ensure approval from other parties in the Bundesrat, the council of federal state governments, such as the Greens. NGOs have criticised what they see as a possible strategy to blame others in case of climate action failure.
Parties set to agree on climate neutrality by 2050
Published and leaked plans indicate the government partners agree on many measures. For one thing, the government looks set to officially embrace the goal of climate neutrality by 2050. So far, Germany is aiming for a greenhouse gas reduction of 80-95 percent by that year. Environment minister Schulze included the goal in her draft climate law from early 2019. Several months later, Chancellor Merkel said the climate cabinet would discuss how Germany could reach net-zero emissions by 2050 – not if. CDU head Annegret Kramp-Karrenbauer has said that, as a contribution to generational justice, her party aims to reach climate neutrality in Germany by 2050 without creating new public debt. And papers from the CSU and SPD both include the mid-century goal.
In the energy sector, the government partners have largely shown support for the coal exit commission's recommendation to phase out fossil fuel by 2038 at the latest – though the CSU has said an exit by as early as 2030 is possible. The economy ministry is currently drafting a coal exit law, and the phase-out plan's key points will likely be part of the climate cabinet decision – as could be the goal of expanding renewables to supply 65 percent of power consumption by 2030.
The CSU, which has until now made headlines by supporting German carmakers, farmers and industry rather than increasing climate ambitions, has agreed on what it calls a "comprehensive climate action concept". The CSU is calling for climate neutrality in Germany "by 2050 at the latest". It says it wants to bring together "social, economic and ecological goals" in one strategy, emphasising "innovation instead of bans". The party rejects a CO₂ tax in the transport and buildings sectors, instead calling for an emissions trading system with upper and lower price limits for the allowances – to be updated regularly. It proposes the use of revenues from the trading system to pay for Germany's feed-in tariffs for renewable power, thus lowering the current renewables surcharge. The party also proposes tax rebates for climate-friendly investments by private citizens and businesses, such as energy-efficient modernisation of buildings or buying climate-friendly appliances. CSU head Söder himself has undergone somewhat of a climate transformation. While a recent poll showed that most Germans find Söder’s new-found interest to be hardly credible, Söder himself maintains his views have nothing to do with "political expediency”, noting that he has been "reading research reports on climate change for a long time”.
The parties have all called for a reform of Germany's energy taxes and levies to better take into account the CO₂ intensity of energy sources. While the system for CO₂ pricing in transport and buildings is still under discussion, the grand coalition generally agrees it wants to make electricity cheaper to push renewable power consumption in all sectors. A reform of the Renewable Energy Act (EEG) and its main instrument – the renewables levy – could also be in the cards.
In transport, there is wide agreement on strengthening rail over road and air traffic, and expanding public transport as well as expanding the e-mobility charging infrastructure and extending the buyer's premium for e-cars. The parties have also called for government support to facilitate the market introduction of climate-friendly synthetic fuels.
The SPD has been stuck between fighting for the jobs of workers in industry and coal mining and calling for more ambitious climate action. In summer 2018, then party head Andrea Nahles attacked the Green Party, accusing it of wanting to shut down lignite plants too fast without thinking of the people in the regions, only to promise the Fridays for Future movement more speed on climate action eight months later. In June 2019, the party leadership decided on a 10-point-plan outlining the SPD's climate policy, which aims to manage the "necessary cohesion in society" during the transition, "contrary to the other parties”. The party advocates the adoption of the Climate Action Law as drafted by environment minister Svenja Schulze, also a Social Democrat. The law aims to make sectoral emission limits legally binding and hold ministries responsible for reaching targets. Schulze has also been the government cabinet's driving force behind plans to introduce CO₂ pricing. She has advocated for a CO₂ tax, arguing that it is easier and faster to implement than emissions trading. Schulze has made clear, however, that she would not "cling" to any specific model. Finance minister and fellow SPD member Olaf Scholz, who until recently only hesitantly supported freeing up additional government funds for climate action and early on rejected the introduction of a CO₂ price, has since come around. He has argued that massive investments in low-emission transport infrastructure, power and gas grids, renewables expansion and new technologies like Power-to-X are now needed to ensure the necessary changes take place over the coming decade. A climate action working group paper drafted by the SPD parliamentary group showed large overlap with the conservatives. Both camps support climate neutrality by 2050, want to reform the complex system of energy taxes and levies, lower prices for renewable electricity, aim to strengthen rail transport, increase the buyer's premium for e-cars, and support the market introduction of climate-friendly synthetic fuels.
Incoming European Commissions promise to raise 2030 target "blind spot" in German debate
20 September is a key date for German climate policy, but in a way it just kicks off a month-long legislative process. Legal experts from relevant ministries will have to assess what the decisions mean for existing and future legislation, then draft necessary texts. These will be debated among the ministries before a cabinet decision can be taken. Then, in a process that could drag into 2020, parliament will consider the drafts and put them up for a vote. Part of the planned climate action legislation will have to be approved by both the Bundestag and the Bundesrat, the council of state governments. The Greens, the Free Democrats (FDP) and the Left Party are part of the governing coalitions of many German states. CDU head Kramp-Karrenbauer has thus called for a "national climate consensus" spanning political parties to ensure Bundesrat consent.
The German government's plans are meant to ensure the country reaches current climate obligations for the 2030 target year. However, it remains unclear what happens if the EU raises its 40-percent emissions reduction target to 50 or 55 percent, as promised by European Commission President-elect Ursula von der Leyen.
"That is indeed the blind spot of the German debate," the German Institute for International and Security Affairs' (SWP) Oliver Geden told Clean Energy Wire. "An increase of the EU target for 2030 to 55 – or for a start 50 – percent will certainly entail tighter requirements for Germany." To raise the target, the EU would have to renegotiate the EU Emissions Trading System (ETS) directive for energy and industry emissions and the Effort Sharing regulation for sectors such as transport and buildings and redistribute obligations among the member states.
An increase of the EU target for 2030 to 55 – or for a start 50 – percent will certainly entail tighter requirements for Germany.
After openly opposing more ambitious EU goals one year ago, Merkel herself recently said she could "very well support" raising the 2030 EU target but stressed that Germany had already "contributed a very large part of total greenhouse gas emissions reduction over many years […] now we need to discuss with our colleagues."
Geden said Merkel's government could try to argue that Germany is already doing more than the EU average and therefore does not want to raise effort sharing ambitions. He added, however: “Then the Eastern Europeans in particular – most of whom do not want to raise the 2030 target at all – will probably refuse a deal.” Thus, Geden argued, the federal government will have to raise ambition. "But maybe not in the current legislative period," as the necessary reforms will likely drag into 2021.