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How German elections could change Europe’s energy transition

How German elections could change Europe’s energy transition

Few countries have followed the twists and turns of the energy transition quite like Germany. Its decision to phase out nuclear post-Fukushima came with a vision for a post-atomic clean energy system – one that has burned no small amount of coal over the past decade. Its rush towards renewable technologies supercharged the growth of the industry in its early days, and the growth of expensive electricity infrastructure more recently. The constant factor in this journey has been the political leadership of Angela Merkel. However, as the Greens surge in polls ahead of elections in September, this continuum could be upended.

How do Germany’s parties approach climate change?

Germany is Europe’s industrial engine – the World Bank puts industry value added in Germany as more than double that of France or the UK. Angela Merkel and the CDU are keenly aware of the fragile position of European industry, and have in the past compromised on sustainability to ensure affordable, reliable energy continues to flow. This hasn’t always been easy; Nord Stream 2 is certainly a project of perceived necessity over political convenience. There are other factors too, ranging from historical divergences across the country to the drive to keep costs of living low. Nonetheless, Germany has far from been a front runner in terms of absolute emissions reductions.Graphic: German energy mix 2020: Energy source's share in primary energy consumption

Even as renewables surge in growth, coal and lignite persist in Germany’s energy system (Source: Clean Energy Wire / CC BY-SA 4.0)

It would be wrong, however, to suggest that the rising Green Party are looking to put German industry out in the cold – indeed they would argue they’re the ones willing to do most to save it. Germany has already experienced the competitive nature of the energy transition first-hand: once upon a time as many as eight of the largest solar companies were German; today none are. This lesson is small compared to the titanic challenges facing Germany’s heavy industries, not least in the automotive sector. For the Green Party, speeding up the pace of the energy transition is fundamental to long term competitiveness.

What does this mean for Europe?

Whatever the outcome of the election, the impacts will be substantial. First it should be noted that the elections occur just as Member States will be kicking off detailed negotiations on the proposals to adapt Europe’s climate and energy framework to the new 2030 GHG target of c. -55%. Prolonged negotiations to form a government could undermine EU progress on this topic, as other countries wait for Germany to take a stance on defining issues. This has happened before, with the last iteration of the CO2 Standards for Cars Regulation for example.

Whether in the lead or supporting a coalition, Annalena Baerbock, the Chancellor candidate for the Green party will look to upgrade climate ambition wherever possible. At the European level this means agreeing to the ambition set out in the 2030 Climate Target Plan – going beyond will be extremely challenging even with the weight of Germany behind it. Nonetheless, a full embrace of the transition to electro-mobility (even an end date for the internal combustion engine) and a continuing push for green hydrogen could stem from a Green-led government. Furthermore, a Green-led government would change the political dynamics within the Council, strengthening new alliances with progressive Member States while undermining relationships with others. Although the centre-right parties (EPP) would retain their majority, the fact that both France and Germany would not be EPP-held could certainly change dynamics.

Delivering Domestically

Where the Greens cannot push at the European level, expect even stronger action domestically. This has advantages, especially in the mindset of the Greens outlined above. However, it risks creating a patchwork of climate legislation that makes it increasingly difficult for companies to operate across the single market. Already this has been a challenge in the Netherlands, whose carbon price floor has been argued to cause distortions. Scaled to the size of Germany, it could pose a significant challenge.

Germany’s energy transition has been shaped by public pressure, global dynamics and economic realism. Now, with the rise of the German Green Party, a new political leadership could add new twists to its winding path towards net-zero.

Cillian Totterdell has been a member of FleishmanHillard’s EU energy, climate and transport team since 2014. He has advised clients from across the economy on the development of Europe’s flagship sustainability initiatives, including the European Green Deal, Clean Energy Package, Sustainable Finance Agenda and EU ETS. Cillian specialises in supporting organisations from highly technical sectors communicate complex narratives to policymakers through integrated communications and advocacy, and he is passionate about Europe’s transition to net-zero GHG emissions by 2050.

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