Friedrich Merz is poised to be Germany’s next chancellor, and coalition talks are already underway following the February 23 national election. Much of the talk in the past week has been about how the new German government will need to lead Europe’s push for security “independence”—a word Merz used in his election night speech—as the continent faces an uncertain future with the United States’ security guarantees. But another critical aspect of Europe’s long-term security is energy and climate diplomacy, which must not be overlooked and could be crucial in forming a solid ruling coalition.
Germany stands at a crossroads in its green transition. As political winds shift both in Berlin and beyond, the next government will need to decide whether to lean into the economic opportunities of clean energy or retreat in the face of short-term political obstacles.
Germany’s changing political landscape on climate
Political winds in Germany have indeed shifted. The environment was front and center in the September 2021 election that saw Olaf Scholz become chancellor. By mid-2022, the Greens were polling at 26 percent, rivaling the Social Democrats (SPD) and the Christian Democrats (CDU). But by 2023, backlash to a heat pump mandate—which in effect banned new oil and gas heating installations—contributed to decreasing support for Scholz’s government, with both the center-right CDU and the far-right Alternative for Germany (AfD) capitalizing on the unpopularity of environmental policies.
In the run-up to the election, Merz’s CDU signaled that it would retreat from key climate measures. The party backs a “true European Energy Union” but seeks to gut core aspects of the European Green Deal. (Ironically, the European Green Deal is championed by European Commissioner and CDU member Ursula von der Leyen.) In Brussels, the CDU and its allies in the European People’s Party are leading the charge to roll back regulations.
At home, Merz has pledged to weaken European Union (EU) emissions limits for cars and reverse the planned 2035 ban on combustion engines, favoring German automakers over climate commitments. With the EU poised to negotiate a 90 percent emissions reduction target for 2040, Germany could soon shift from climate leader to climate roadblock.
The economic and political case for staying the course
Critics of the green transition paint it as too expensive and bureaucratic. But the reality is quite the opposite—clean energy is an economic engine. Investing in the green transition means new industries, new jobs, and long-term growth that far outweighs the initial costs.
This isn’t just political rhetoric; it’s quickly becoming economic consensus. Former European Central Bank President Mario Draghi’s September 2024 landmark report makes it clear: the only path to Europe’s long-term competitiveness is shifting away from fossil fuels. As the Draghi report illustrates, clean technology is no longer just an environmental necessity—it’s an economic imperative.
The International Energy Agency estimates that the global clean energy market will triple, to two trillion dollars by 2035. That’s one-third of the US federal budget and four times Germany’s. If Germany slows down now, it risks forfeiting a once-in-a-generation economic opportunity.
Merz also should not overlook the political advantages to be gained from incorporating strengthened green initiatives into his program. Coming in behind the SPD, the Greens were the fourth-largest party, gaining nearly 12 percent of the vote. Although Merz no longer necessarily needs the Greens to form a coalition, this is only because the Free Democrats (FDP) and Bündnis Sahra Wagenknecht (BSW) narrowly missed the 5 percent parliamentary threshold. Looking ahead, Merz may very well end up needing the Greens on his side. In addition, priorities for green initiatives are often shared among much of the electorate for both the SPD and Die Linke, or the Left Party, as well. Taking those priorities seriously could go a long way toward building approval among the 36 percent of the German electorate who voted for leftist parties.
Energy security and the geopolitical stakes
Beyond economics, energy independence is a growing security concern. To speak in broad terms, Germany has three options:
- Buy natural gas from a hostile Russia or a United States that seems increasingly unreliable toward Europe
- Continue relying on coal, a finite and highly polluting resource
- Pioneer renewable energy and solidify its position as a global leader
With transatlantic security ties under strain and Europe forced to take more responsibility for its defense, energy security is now national security. A centralized investment in energy independence is Germany’s best bet for maintaining economic strength and strategic autonomy.
A blueprint for German leadership
Germany doesn’t need to go it alone—it needs to double down on partnerships and innovation. Key policies to strengthen its role in the global green economy include:
- Using its influence in the EU to expand the bloc’s Net-Zero Industry Act to bring 40 percent of clean tech production back to Europe by 2030
- Scaling up investments in critical minerals mining and refinement with partners such as Canada and Australia
- Advancing green hydrogen projects, like those already underway in Namibia
- Focusing on high-value, specialized clean tech (offshore wind, hydrogen, advanced battery chemistries) rather than trying to outcompete China in mass production
Europe’s strategic advantage
While Germany and the EU may not be able to displace China in climate supply chains, they can out-innovate Beijing in key sectors. The future of the transatlantic alliance could be built on a clean energy partnership, not just military cooperation.
By investing where there is inevitable demand, Germany can secure its place as a leader in the twenty-first-century economy—strengthening both Europe’s geopolitical standing and its relationship with the United States in the process.
The choice is clear: cutting back on green policies would be an economic and strategic mistake. The incoming German government can either seize the momentum or let others lead the way.
Carol Schaeffer is a nonresident senior fellow with the Atlantic Council’s Europe Center and a policy fellow with the Jain Family Institute, focusing on decarbonization, the energy transition, and European policy.
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Image: Friedrich Merz, CDU Federal Chairman and CDU/CSU parliamentary group leader in the Bundestag, arrives at a press conference after the CDU Executive Committee meeting.