German coalition aims to overcome differences on future of energy prices, heating, combustion cars

The heads of Germany’s governing coalition parties are set to meet on Thursday evening (13 November) to tackle a range of energy and climate policy-related issues including the phase-out of fossil fuels in heating and the planned end of new combustion engine cars by 2035, reported Der Spiegel. Leading members of chancellor Friedrich Merz’s conservative Christian Democrats (CDU) and the centre-left Social Democrats (SPD) were scheduled to gather at the chancellery in Berlin.

Among the topics on the agenda are energy costs, the pending reform of rules governing decarbonisation in the heating sector, and Germany’s position on the planned 2035 phase-out of new combustion engine vehicles in the EU, reported Der Spiegel. In a separate article by news agency dpa, CDU parliamentary group head Jens Spahn said he expected agreements on industry electricity price subsidies and plans for new gas-fired power plants. 

The government hopes that a special "industry power price" will help struggling producers like steelmakers regain competitiveness through subsidised electricity. Chancellor Merz said last week an agreement with the EU on the state aid scheme was imminent. Economy minister Katherina Reiche has said that she expected that Germany to be ready to introduce the industrial electricity price on 1 January 2026.

On the combustion engine phase-out, the parties appeared to move closer to a joint position in recent weeks. Merz in October vowed to push for a softening of the 2035 ban at EU level, which was also a key conservative position in the election campaign. SPD head Lars Klingbeil in an interview with news agency dpa earlier this week signalled his party’s readiness to find a compromise on softening the planned EU policy, arguing that car companies in return would have to commit to keeping production in Germany. Environmentalists have warned that reopening the agreed EU rules on the phase-out would slow the shift to clean mobility and ultimately put car industry jobs at risk.

By contrast, there is less clarity on the outcome of talks on heating sector rules, where the two coalition parties recently still appeared to be at odds on key aspects. Economy minister Reiche earlier this week signalled that the government could review the current system of support for homeowners looking to modernise their heating systems. Environmental groups also warned that an existing minimum prerequisite of 65 percent renewable energy in new heating systems could be weakened. However, SPD environment minister Carsten Schneider insisted that the related reform to Germany’s Building Energy Act (GEG) and other support rules would not alter the core principles of the existing law.