Conservative German election winner Merz seeks coalition with SPD, Greens sidelined
A long election night in Germany has ended with five parties entering the next parliament and the conservative alliance of the Christian Democratic Union (CDU) and the Christian Social Union (CSU) under chancellor candidate Friedrich Merz becoming the strongest force. Since both the pro-business Free Democrats (FDP) and the pro-Russia Sahra Wagenknecht Alliance (BSW) failed to clear the five percent threshold required to enter parliament and no other party is willing to partner with the second-placed far-right Alternative for Germany (AfD), the range of realistic coalition scenarios has narrowed down considerably.
Despite achieving the CDU/CSU’s second-worst result in history, this gives Merz the chance to form a majority with only one other party - the Social Democrats (SPD) of current chancellor Olaf Scholz. However, Scholz said he would make way for others in his party to lead possible coalition talks after the SPD incurred its worst-ever election result and came in third. The weak result of the Green Party, on the other hand, means it could only enter government in a three-party coalition, which Merz said he would not pursue at this time. The strong focus on climate action and the energy transition of the outgoing government that was championed by the Greens is therefore unlikely to be repeated in the next government.
The CDU/CSU has signalled that it aims for a speedy coalition formation, as a multitude of domestic and international challenges for Germany and the EU requires the bloc’s biggest economy to present a government capable of making decisions as quickly as possible. Conservative leader Merz has said he hopes to agree on a coalition by Easter (20 April), arguing that “the world out there is not waiting for us.” Merz’s odds for making good on this ambition have increased considerably after it became clear that neither the FDP nor the BSW will be represented in parliament, which would likely have made a three-party coalition necessary. “We are able to build a coalition with the SPD. And that is exactly what we want to do,“ Merz said on the day after the election. CDU parliamentary group leader Jens Spahn said his party “can start very, very fast” with coalition negotiations, adding that first exploratory talks should be held in the next days.
The SPD is the conservative alliance’s logical first choice for forming a coalition not only because this would be the only viable model for a two-party government but also because the pair have more common ground than any other constellation – particularly compared to the Greens and their focus on fast decarbonisation. “The CDU clearly prefers a coalition with the SPD over one with the Greens,” former CDU MP Ursula Heinen-Esser told Clean Energy Wire ahead of the election. However, she added that “this is the constellation in which I see the greatest risks for climate policy,” arguing that the SPD “shows less ambition here than the CDU.”
SPD expects difficult talks with "mini-Trump"
The two parties have worked together for twelve of the 16 years that Germany was led by former CDU chancellor Angela Merkel and during that time they oversaw a wide range of climate and energy policies that made Germany a frontrunner in the roll-out of renewable energy sources and other decarbonisation technologies. However, at the end of their previous coalition government in 2021, the CDU/CSU and the SPD had been widely criticised for stifling renewables expansion and failing to speed up emissions reduction, a shortcoming that was partly corrected by the outgoing coalition government of the SPD, the Greens and the FDP under chancellor Scholz.
CDU leader Merz is not known as a fierce advocate of climate action but also repeatedly has said that he recognises the need to bring down emissions quickly – and to make the German economy fit for competing in a post-fossil future. Likewise, the SPD has not been outspoken on climate in an election campaign that was dominated by questions regarding domestic and international security, economic stability and purchasing power – and in which all parties put a smaller emphasis on decarbonisation than in 2021. However, like the CDU/CSU, the Social Democrats firmly back Germany’s 2045 climate neutrality target and in the outgoing government helped introduce a wide range of ambitious energy transition policies. In a possible upcoming coalition, however, concerns about transition costs for citizens as well as for businesses could become the new focus for both the SPD and the Conservatives.
The SPD’s secretary general, Matthias Miersch, said he expected “difficult talks” with the CDU/CSU under Merz. On the day before the election Miersch had accused the CDU leader of “talking like a mini-Trump”, after Merz’s comments about “left and green nutters” in other parties had evoked parallels to the divisive rhetoric of U.S. president Donald Trump. “This is not what someone says who wants to become chancellor for all,” Miersch commented. Merz later added that his comments referred only to the party fringes of political opponents, but the friction shortly before the election fell in line with a series of open spats between Merz and his potential coalition partners that according to senior SPD representatives had “deepened the trenches” between them. The SPD politician said there is “no automatism” that would force his party into a coalition with the conservative alliance but added that the “democratic centre” of the country had to “find ways to work together during these difficult times.” The secretary general said that an internal SPD vote ultimately would have to decide whether another coalition with the CDU/CSU under Merz is possible.
After incurring its worst-ever election result in history, the SPD looks set for a major reshuffling of its leadership. With Scholz assuming responsibility for the disastrous outcome and signalling his withdrawal from the party’s decisionmaker ranks, the party could soon be headed for a new leadership contest – for which current defence minister Boris Pistorius is seen as a likely contender.
Regarding potential roadblocks in coalition talks with the conservatives [see our factsheet here], Miersch said that stabilising the country’s public pension scheme and tax relief for citizens could become controversial issues. However, the SPD and the CDU/CSU also differ on a wide range of climate and energy policy issues that are likely to surface as moot points in possible negotiations – even though they agree on a climate bonus scheme and the reduction of grid fees to relieve citizens and businesses as well as the buildout of renewables to push decarbonisation across all sectors.
Multiple roadblocks in climate and energy despite shared transition commitment
Above all, the parties would have to agree on a mechanism to reconcile the massive need for investments in climate action, infrastructure, defence and other areas with the country’s debt brake, the constitutional ceiling on new government borrowing that partly caused the previous coalition government’s collapse. While the SPD has been vocal about a reform to the debt brake and the CDU/CSU did not rule it out either, the conservatives have signalled they would prefer to stick to the rule and rather set strong incentives for private investors to raise the required funds. However, changing the rule in the constitution would require a two-thirds majority in parliament, for which a coalition between the CDU/CSU and the SPD would need the help of both the Green Party and the Left Party, which surprised many observers by returning to parliament with considerable gains.
A Merz-led coalition backed by the SPD would likely also have to figure out a compromise on the planned phase-out of fossil heating systems, for which the outgoing SPD-led government had introduced the contentious "heating law," which the CDU/CSU has promised to get rid of in its current form. Heating industry representatives have warned Merz to repeal the legislation that was crafted in a complex and protracted process and now provides clarity for companies and citizens when oil and gas heating systems cease to be an option.
Regarding the transition in the transport sector, none of the two parties has shown great ambition to prioritise the transition to electric vehicles. While the CDU/CSU has clearly rejected the EU’s planned 2035 ban on new registrations of combustion engines, the SPD has said it wants to stick to the target. However, the Social Democrats face the possibility of labour unions and other interest groups benefitting from Germany’s strength in combustion technology exerting pressure to not stimy the country’s automotive industry at a time weak economic growth, looming worker layoffs and car factory closures across Germany.
As for Germany’s coal phase-out, scheduled for 2038 at the latest, none of the parties have signalled an interest in moving away from the target – but also have not been vocal about pulling the target date forward, an approach favoured by the Green Party in the outgoing government. Merz has ruled out shutting down coal power plants until security of electricity supply is guaranteed – a procedure which the Federal Network Agency BNetzA would also ensure anyway. However, the use of coal-fired power production in Germany has dwindled in recent years and is now at its lowest level in decades, also after Germany shuttered its last three remaining nuclear power plants under Scholz in 2023.
SPD and conservatives are also unlikely to fall out over nuclear power in coalition talks. While the CDU/CSU has said it would like to explore whether Germany's nuclear plants that were last phased out could run again at reasonable technical and financial cost, this is unlikely to result in an actual re-entry into existing nuclear power technology, as operators and researchers have voiced doubts over the feasibility and benefits of such a step.
