Germany’s new energy minister calls for “reality check” of costs and risks of renewables

The new German economy and energy minister, conservative Christian Democrat (CDU) politician Katherina Reiche, has said that Germany had to “find a new agreement on the fundamentals” to run a freer energy market and achieve more innovation in the sector, with energy security being the highest priority. “The blackout on the Iberian Peninsula showed how vulnerable an electricity system can be. We must prepare ourselves for minimising risks of this kind.” While the expansion of wind and solar power had allowed Germany to make progress on climate action, “systemic risks and costs have been underestimated.” At her inaugural address in the ministry, Reiche said the country therefore needed a “reality check” in energy policy, which would mean that further expansion of renewable power sources is better aligned with grid expansion.

She argued that “renewable energy sources alone will not be able to reliably and affordably supply an industrialised nation like Germany with electricity” and added that the planned auctions for up to 20 gigawatt of new gas-fired power plant capacity would be launched quickly. At the same time, the country would have to allow for a greater role of carbon management (CCS/CCU). Reiche stressed that she would work to implement agreements made in the coalition treaty, including a new approach on decarbonising the heating sector “with flexible rules based on long-term CO2-reduction,” the introduction of an industry power price and the use of reserve power plants to stabilise prices instead of only guaranteeing grid stability. “We’re aware that this means a lot of work” at the EU level, she added.

Reiche also lauded the work of her predecessor, Robert Habeck from the Green Party. With a view to the work done by Habeck and his ministry at the height of the energy crisis and Russia’s invasion of Ukraine, Reiche said Habeck “had accepted this exceptional situation as his own task, was present at all times and made unpopular decisions,” often also under criticism from his own party, to navigate the crisis.

The new minister said she would take over “with a lot of humbleness and great respect” and added that Germany faced “very big” challenges to revive its flailing economy. “All major industries are going through a comprehensive transformation,” Reiche argued, while high taxes, energy and labour costs, and extensive bureaucracy would slow down companies in competition on international markets. The new minister said that Russia’s war, as well as the trade policies of the US government under president Donald Trump, added to the country’s economic woes, but stressed that the root cause of the country’s problems “is ‘Made in Germany’.” At the same time, she added, “this means that the solution can also be ‘Made in Germany’.” She said her approach would be “a policy that does not primarily rely on regulation but on activation and letting market participants assume responsibility for themselves.”