Members of Germany’s Social Democratic Party (SPD) have a big decision to make.

SPD party members have until March 2 to vote on whether their party should participate in a coalition government with the Christian Democratic Union (CDU), the party of Chancellor Angela Merkel. The vote puts SPD party members in a difficult position—endorse a coalition many of them oppose in the interest of stability or withhold support and face potential uncertainty—and this has caused disarray in the party, on the heels of its worst election results in the post-war period.

The choice will likely be the deciding factor in an almost six-month journey to form a new government following elections in September. The deal to form another so-called “Grand Coalition” between the CDU and SPD was reached after negotiations between the CDU, the Green Party, and the Free Democratic Party (FDP) to form a “Jamaica Coalition” collapsed in the fall, facing an impasse on several issues, including migration.

While it seems increasingly likely that SPD voters will approve the coalition, the process has caused consternation in both parties. For the CDU, Merkel has been criticized for making concessions, including the finance ministry, to the Social Democrats, while Martin Schulz resigned as SPD’s party chair, in part over discontent over the decision to form a government with the CDU despite declaring the opposite and his temporary decision to accept—and then decline—the role of foreign minister.

While SPD voters will cast their ballots based on whether they support their party’s decision enter into a grand coalition with Merkel’s CDU despite pledging not to, rather than on the substance of the coalition agreement, the energy and climate policies included in the agreement—as well as those that are not—are worth considering.

1. The coalition agreement lowers expectations—and acknowledges defeat—on Germany’s 2020 climate targets.

Acknowledging that Germany will not meet its target of reducing emissions forty percent over 1990 levels by 2020, the agreement instead calls for lowering emissions as much and as quickly as possible. However, the parties agreed that Germany would meet its 2030 target—in line with the EU targets under the Paris Agreement—and even introduce a law to ensure this happens.  

More broadly, while the coalition agreement reiterates its support for continuing the energiewende and serving as a pioneer in marrying climate protection with economic growth.

2. The coal exit, a stumbling block in the failed Jamaica coalition negotiations, has been sidestepped by setting up a special commission to look at and manage the phase out of coal.

The commission on “growth, structural change, and unemployment” would be charged with developing a plan to phase out coal. While institutionalizing the question and establishing a timeframe for a decision and action plan could be seen as incremental progress, others have criticized this as kicking the can down the road, as Germany remains the world’s largest producer of lignite coal.

3. While the coalition agreement is silent on the controversial Nord Stream II project, Merkel breaks hers.

Following a meeting with the Polish Prime Minister, Merkel called the pipeline an “economic project” in contrast to the view from Poland. While the coalition agreement did not address the project, the issue is somewhat controversial for the SPD given former Chancellor Schroeder’s role as Chairman of the Board of Directors at Nord Stream 2 and chairman of Russian oil giant Rosneft.

While Merkel began speaking up, the United States has continued its vocal opposition to the project. At a joint news conference with the Polish Prime Minister, Secretary of State Rex Tillerson said the pipeline would undermine European energy security. As the US continues to tout LNG export capacity and the increasingly liquid global LNG market as a boon to European energy security, the coalition aims to make Germany a “location” for LNG.

4. The coalition acknowledges the future of transportation, and Germany enters the debate.  

While Germany has been slow to adapt its energiewende approach to the transportation sector, the coalition agreement outlines a special commission to look at the future of transport and mobility. Changes in Germany’s power sector have long been underway, but the country has hardly been a first mover when it comes to changes in transportation. The auto sector is Germany’s largest, accounting for over €400 billion in revenue in 2016 and directly employing 800,00 workers.

Thus, while Norway, China, France, and the UK have all announced their intention to move away from the combustion engine, Germany has been much more hesitant. However, if the transition to electric vehicles is even half as optimistic as some projections, German industry can ill afford to be left behind.

Importantly, the coalition agreement also noted that Germany would look to battery and cell production as an area of economic and industrial policy. Additionally, while many expect more of the same from a coalition government, it is telling that the coalition is pushing researchers to look at a more integrated energy system, rather than focus solely on the power sector—and increasing federal funding to do so.

Ellen Scholl is deputy director of the Atlantic Council Global Energy Center, and was a 2015-2016 Robert Bosch Fellow in Berlin. You can follow her on Twitter @EllenScholl

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