The six-month wait for a new German government came to an end when Friedrich Merz was finally confirmed as chancellor in a day of high drama in parliament on 6 May. Stakeholders and observers have urged the new chancellor to keep energy and climate decisions high on his government’s agenda. If done correctly, a fresh resolve in the decarbonisation and transformation of the EU’s largest economy could couple greater European cohesion and sovereignty with Merz’s key promise on the campaign trail to revive Germany’s industry. But the unprecedented dissent at the chancellor’s election ceremony could have foreshadowed lingering conflict lines, according to CLEW.
Friedrich Merz has been made Germany’s new chancellor – but only after being forced into an unprecedented second round of voting in parliament. Exactly six months after Olaf Scholz declared the collapse of his own coalition government, his conservative opponent Merz was sworn in amid scenes of confusion and drama in Germany’s Bundestag following the temporary defection of several lawmakers belonging to one of his coalition’s parties. While Merz and his government cabinet – consisting of ministers from the conservative Christian Democrat Union (CDU), its Bavarian sister party Christian Social Union (CSU) and their partner the Social Democratic Party (SPD) – were eventually able to begin their work, the commotion hinted at potential internal difficulties facing the new government, including regarding upcoming climate and energy policy decisions.
The previous government’s early collapse left over a raft of unfinished policy business. Above all, the new government must approve a final budget for 2025 and provide clarity on how it intends to fund its projects, including payments from its 500-billion-euro special fund for infrastructure and climate neutrality projects. Among the first actions the new government is expected to take are cuts to the electricity tax and grid fees that the CDU/CSU and the SPD already agreed on before finalising the coalition treaty. The energy ministry is also expected to quickly launch a monitoring of central energy system variables, including projected future power demand, which will serve as a guide for the planning of renewables, storage capacity, and grid expansion. It will also quickly have to launch auctions for new gas-fired power plants to complement renewables as back-up capacity.
The relatively tranquil coalition negotiations that preceded the chancellor’s nail-biting election in parliament on 6 May had raised hopes of a smooth start for the new CDU/CSU-SPD government, the coalition that has governed Germany for the better part of the past 25 years. “Eighteen lawmakers from the coalition parties rejected their consent and almost provoked a real crisis,” Ursula Heinen-Esser, a former member of parliament for Merz’s CDU, told Clean Energy Wire. “I hope that the coalition from now on is seen as acting professionally and avoids internal mistrust.”
The new government will have to “make a real effort in its first 100 days, not least in climate and energy policy”, said former lawmaker Heinen-Esser, who led Germany’s delegation to the 2013 UN climate summit. For Heinen-Esser, the fact that climate action received relatively little attention in the coalition agreement compared to the previous government is due more to a fast-changing political environment than to a lack of interest from the coalition. Fast decisions on a wide range of climate-related issues are needed until mid-August, the end of the government’s traditional 100-day grace period, she argued.
Simone Peter, head of German Renewable Energy Federation (BEE), shared the view that the new government had put forth a solid groundwork for “future-proof energy policy” in its coalition treaty and welcomed Merz’s staffing choices. However, the ministries for transport, agriculture, and construction would be under pressure to enact change, as these sectors had repeatedly missed climate targets in the past. Peter said that safeguarding continued energy transition investments and a “flexibility agenda” to better balance power supply and demand in the system would be among the most urgent energy policy tasks for the Merz government’s first 100 days in office. Sudden and disruptive turnarounds on funding, as happened with the previous government’s debt brake fiasco, must be avoided, Peter stressed. “Planning security remains the leading principle.”
Energy cost concerns could clash with Germany’s role as EU climate ambition underwriter
Secure planning and investment conditions were sorely lacking for many companies in the BEE and beyond in the past years. The energy crisis, fast inflation and constant internal government disputes about key energy policy questions dominated the three years of Scholz’s government, which at the beginning of its term in 2021 envisaged a green growth miracle based on climate friendly technologies. However, the series of international crises, as well as domestic policy shortcomings, instead ushered in a period of severe economic difficulties for Germany that engulfed the powerful industry sector of Europe’s largest economy. This led to decarbonisation efforts by citizens and lawmakers tumbling down the list of priorities as greater urgency was given to other issues.
Germany’s industry, though, never lost sight of the goal of decarbonisation, Matthias Belitz, head of the association of Energy Intensive Industries Germany (EID) told Clean Energy Wire. Companies were “working intensively” on solutions to bring down the carbon footprint of basic materials like paper, glass, steel, cement, or plastic, the industry lobbyist argued. A successful transformation towards climate neutrality, therefore, would be a decisive factor for the industry’s future: “Many companies currently are no longer competitive,” he said. Belitz says that ensuring a quick financial relief for industrial producers would be a good marker of success for the first 100 days of Merz’s government. Likewise, the new government has to quickly provide legal clarity on carbon management solutions (CCS/CCU) and draw up a plan for lowering the energy system’s costs in the long-run. “There must now be a consistent focus on affordability, cost efficiency and security of supply in all areas,” the EID head said.