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What to expect from Germany’s new government for energy and climate policy in the EU?

Germany’s new government under Angela Merkel (her third term) was sworn in on 17 December 2013. While some faces will be familiar, much has changed as Merkel’s Christian Democrats (CDU) entered a ‘grand coalition’ with the Social Democrats (SPD) after voters ousted her last coalition partner, the Free Democratic Party (FDP), from parliament. But what can we expect from this new government regarding climate and energy policy in the EU?

There are two key developments that are likely to influence Germany’s engagement with energy and climate policy nationally, in the EU and beyond: first, one of Germany’s most powerful politicians, SPD Chairman and Vice Chancellor Sigmar Gabriel now leads the Ministry of Economics and Energy, which exclusively steers Germany’s national transition to renewable energy (Energiewende). [1] This move takes away responsibility from the Ministry of the Environment, which had been involved with the Energiewende before. Second, according to the coalition agreement, the current government aims to maintain Germany’s previously agreed energy and climate goals, but it is unlikely to push for more ambitious policies beyond reaffirming long-standing targets.

By putting the Ministry of Economics and Energy in charge of the Energiewende, the German government aims to equalize the weight of environmental, economic cost and supply security considerations in relevant policies. [2][3] During the last government, the Renewable Energy Act (EEG) had come under fire because of rising electricity prices. Gabriel will find himself torn between satisfying Germany’s climate and energy targets to maintain international credibility while appeasing voters at home, who are concerned about rising energy prices. Gabriel is known as a straight-talking politician, who has not shied away from calling for unpopular decisions in the past, such as introducing a speed limit on Germany’s highways.[4] While the climate and environment portfolio was relatively new for him when he became Germany’s Environment Minister under Merkel’s first administration (2005-2009)[5], the experience he gathered as an international negotiator in this role—Germany held the Council presidency in 2007—will serve him well in the coming years, particularly when working with European partners on a common electricity market as the coalition agreement details.[6] A recent push for a new EU renewables target by eight member states including Germany underlines the country’s intention to better coordinate national energy policies in the EU.[7] Debate at European level about Germany’s energy transition will likely intensify, especially as the European Commission recently launched an investigation into Germany’s exemptions for many energy-intensive companies from paying a renewables surcharge under the EEG.[8][9] This investigation links with larger ongoing debates about the role of state subsidies in stimulating renewable energy development across the EU.[10] The outcome of this investigation, together with Germany’s overall management of its energy transition, could become an important policy signal for similar projects in other European countries or the EU as a whole.

Facing these challenges, it is unlikely we will see much new climate and energy policy development in Germany, but rather an adjustment of existing policies. The coalition agreement reaffirms Germany’s long-standing commitments to 40% carbon dioxide emissions reductions against the 1990 baseline by 2020[11], and a commitment to support an EU-wide reduction of 40% by 2030. Regarding emissions trading, the government affirms its commitment to reintroducing the 900 million allowances withheld under the backloading scheme,[12] and appears cautious to intervene in the carbon market more generally. With a view to the Paris Conference in 2015, the agreement envisions greenhouse gas emissions reductions of ‘up to’ 85 to 90% by 2050.[13] However, there are warnings that the current approach will not suffice to attain Germany’s 2020 emissions targets[14], and environmental groups criticize the coalition agreement more broadly for lack of environmental ambition particularly because it fails to include plans to make climate protection legally binding in Germany, does not call for a reform of emissions trading and because it will arguably slow down renewable energy deployment in Germany.[15][16][17]

Taken together, Germany’s energy and climate policy ambitions are thus unlikely to increase over the next four years as the government seeks to adjust existing policies in light of criticism about rising costs. However, we may see Germany pushing for further energy policy coordination in the EU and the management of its domestic energy policy could potentially have a signalling function for other European nations and beyond.

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