September 26, 2017
In the German elections on September 24, Germany’s Christian Democrat Union (CDU) emerged once again as the most popular party, securing a fourth term for Chancellor Angela Merkel. While the question of who will lead Germany was answered, the question of which parties will govern the country—and in what coalition—is far from settled. As coalition negotiations between the parties unfold against the backdrop of competing foreign and domestic agendas, the future of German energy and climate policy hangs in the balance.

Germany’s approach to clean energy on the world stage, namely its support for the Paris Climate Agreement and promotion of the clean energy transition as a foreign policy priority, is unlikely to change in any meaningful way. With strong domestic support for clean energy policy, there is also little doubt that the German energy transition, or Energiewende, will continue.

Rather, the question is one of ambition.

The composition of the coalition that emerges in the Bundestag will determine the degree and pace of Germany’s commitment to carbon reduction and climate protection. This will be based on the dominant parties’ approach to more specific (and more controversial) questions over the role of coal in Germany’s domestic energy mix, the potential for a coal phase out, national versus European-level emissions reductions targets, policy framework to meet those targets, and the future of the combustion engine. 

For instance, the Green Party wants a phase out of coal-fired power production by 2030, and made the formulation of a timetable for the phase out of Germany’s twenty most polluting power plants a condition to joining any coalition. The liberal Free Democratic Party (FDP) head, Christian Lindner, opposes state intervention and has expressed support for coal-fired power stations remaining in the power market. Along with timing, method is another potential area of contention, with the Green Party in favor of a carbon price floor, a mechanism thus far rejected by the CDU and FDP.

How these competing agendas are addressed in the new government depends on who—which parties, in which coalition—will oversee policy and the implementing agencies. The Social Democratic Party (SPD), the partner of Merkel’s CDU in the grand coalition over the last four years, announced it does not intend to join the next government after the CDU’s poorest election showing in the post-war period. While the far-right Alternative for Germany (AfD) emerged as the third-strongest party with 13 percent of the vote, it is anathema to the other parties. Thus, whatever coalition emerges, the CDU will face real opposition not just from the left, but from the far right as well.

This complicated dynamic leaves the CDU with a limited range of options for cobbling together a governing coalition. Analysts point to the likelihood of a Jamaica coalition (so called because the colors of the parties match the colors of the Jamaican flag), comprised of the CDU, the Green Party, and the Liberal Democrats (FDP). Such an outcome could put the energy and climate policy choices Germany faces in sharp relief, as the CDU could find itself in an uncomfortable position between the free-market FDP and fossil fuel phase out pressure from the Greens.  

The different parties’ approaches to the issues at stake are indicative of the potential outcomes.

Coal-fired power, the largest source of power generation in Germany, will likely be a major point of contention in a new coalition. Germany, the EU’s largest coal consumer and second-largest coal producer after Poland, is struggling to reduce production and consumption of domestic lignite. The potential—and date for—a coal phase out was discussed under the grand coalition, which has governed the past four years, but with little agreement. Indeed, a concrete date was conspicuously absent from Germany’s 2050 Climate Action Plan.

While there is agreement among the parties that Germany’s commitment to emissions reduction should continue, the level and pace of reduction and the mechanisms and means with which to pursue them is a point of debate. It is increasingly clear that Germany will miss its 2020 emissions reductions target of 40 percent below 1990 levels. This shortfall has been acknowledged by the government, and  a recent study by Agora Energiewende put the 2020 reductions at 30 percent absent further policy measures. 

While Merkel has pledged to take action to meet the 2020 targets, the FDP, which advocates a market-based approach founded on EU-level targets, has called on Germany to scale back its emissions reduction efforts, and, in particular, not to go beyond the EU targets. The FDP also sees the European Emissions Trading Scheme, rather than domestic policy measures, as the appropriate policy mechanism for reducing emissions. The party has called for ending the system of renewable subsidies provisioned under Germany’s Renewable Energy Act.  

While mentions of coal and climate were largely absent from the election debate, Volkswagen’s diesel emissions scandal did focus some attention on the role of the transport sector in reducing carbon emissions. Transportation is currently the only sector in Germany expected to have higher emissions in 2020 than it does now. The issue, which has become increasingly political, hinges on how new climate and clean energy policies agreed upon by the new government will deal with the strong domestic automobile industry, which employs around 800,000 people in Germany.

Merkel herself has thus far opposed the idea of a European Union (EU)-wide electric vehicle quota, an idea put forth by SPD candidate Martin Schulz. However, the Green Party has called for an end to gasoline-fired vehicles by 2030. The Green Party’s candidate, Cem Özdemir, said the party will not enter into a coalition that does not “initiate the end of the fossil fueled combustion engine era.” Meanwhile, the FDP advocates for remaining technology neutral.

While it remains to be seen which coalition will emerge, the June 2017 CDU-FDP coalition agreement in North Rhine-Westphalia, responsible for a third of German energy production and home to utilities RWE and E.On, gives a sense of the issues to be reconciled in a coalition that includes the Green Party. The coalition agreement promises an energy policy restart and emphasizes competitive, market-based mechanisms. The agreement calls for an end to subsidies for new power generation, a slow-down in wind expansion, and limits the state’s climate protection law to not go beyond the EU goals, while the CDU premier in Saxony Anhalt has said lignite coal will play an important role in Germany to 2050.

Ultimately, the necessary negotiations (and tradeoffs) of coalition formation will reflect the importance each party places on their energy and climate goals in relation to other policy priorities. For the Green Party, which has staked its reputation on climate protection, it may have a lot more to gain by digging in its heels, but a lot more to lose if it emerges empty handed.

Ellen Scholl is an associate director at the Atlantic Council’s Global Energy Center. She was also a 2015-2016 Robert Bosch Fellow in Germany. You can follow her on Twitter @EllenScholl. 

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