German chancellor candidate Merz must walk fine line between restart and continuity in energy and climate
After losing its place in the German government in 2021, Germany’s conservative Christian Democratic Union (CDU) is poised to regain its leading position in the country’s politics and form the next coalition government. Less than a full term after the last elections – and just about a week before the snap elections on 23 February that followed on the collapse of the coalition government of chancellor Olaf Scholz’s Social Democrats (SPD), the Green Party and the pro-business Free Democrats (FDP) – the CDU is enjoying a comfortable lead in polls. The party is widely expected to win the election, with the choice of its future coalition partner seemingly the most important open question left to be answered at the ballot.
But the CDU of 2025 is no longer the same that Germans voted out at the previous election after 16 years in power. Its new leader, Friedrich Merz, took over in 2022 after losing out in two previous internal leadership bids against candidates seen as supporters of long-term CDU chancellor Angela Merkel’s liberal-centrist approach to government. Despite overseeing the CDU’s return to the top of national polls, Merz himself remains shrouded in mystery for many voters – not least with respect to his approach on Germany’s future energy and climate policy.
During the election campaign, Merz so far said he dislikes the appearance of wind turbines and hoped they could be replaced by something else one day, and insisted that his government would repeal Building Energy Law that the outgoing government adopted to comply with EU climate targets. He repeatedly said he regretted Germany’s nuclear exit – while admitting that a return is less likely than ever. However, the CDU’s election manifesto remained steadfast on the energy transition: “We will consistently use renewable energies, all of them.” In his personal newsletter, Merz in early 2025 stressed that “we stand by the Paris Climate Agreement and our ambitious climate targets” but added that this should be achieved “with intelligent solutions, not ideological ones.”
“Climate policy is probably not something that is close to Mr Merz’s heart”
So, what kind of solutions to one of the greatest challenges is the leader of Germany’s prospective next government looking for?
“Climate policy is probably not something that is close to Mr Merz’s heart,” Ursula Heinen-Esser, a former member of parliament for the CDU, told Clean Energy Wire.
Like Merz, Heinen-Esser hails from the party’s largest subnational grouping in the western state of North Rhine-Westphalia and together with him served as an MP in Berlin since 1998. “But he clearly sees the need for action,” she added, arguing that the party leader favours creating incentives and using market-based instruments instead of regulation and planned phase-outs of technologies to achieve decarbonisation targets. However, a majority of 51 percent of German citizens asked by environmental NGO BUND doubted Merz’s ability to craft a successful climate policy as chancellor.
For Heinen-Esser, who after serving in subsequent Merkel governments went on to be CDU environment minister of North Rhine-Westphalia until 2022, said “the issue is not to decide whether there needs to be a focus on ecology or on the economy, but rather to make both work together.” Thanks to his stellar career in the corporate world after leaving parliament, Merz would be the right choice for becoming chancellor at a time when the German economy is grappling with historically weak growth and structural problems in key industries compounded by higher energy prices, she argued.
Tangible threats to jobs and financial prosperity have pushed topics like climate action down the list of German voters’ priorities, notably in the wake of Russia’s invasion of Ukraine. Despite most Germans still being in favour of ambitious climate policy, all parties have been less vocal about decarbonisation than in 2021. According to Heinen-Esser, failing to acknowledge this shift and “the bigger picture” in the economy contributed to the collapse of the outgoing coalition government, a failure that the CDU under Merz would avoid.
However, the chancellor candidate’s carefully curated profile as an assertive businessman also raises the most questions for many voters. A rising star in German politics already during the late 1990s and early 2000s, the law graduate has been a public figure for decades. But the outspoken internal party rival, of Merkel, who stood for a more traditional conservative line on issues including migration, nuclear power, or taxation, was gradually edged out of the limelight after she became chancellor in 2005. He started working as a lawyer at US law firm Mayer Brown. In 2006, he unsuccessfully litigated against having to reveal his secondary income besides his salary as an MP. Merz then fully retreated from politics in 2009 to focus on his work in the private sector, where his ties to the government party gave him a marketable asset.
Besides his position as a legal advisor for several major corporations, Merz sat on the board of about a dozen companies, including chemicals producer BASF, pharmaceuticals manufacturer Bayer AG, stock market operator Deutsche Börse, aviation company Airbus, the major banks HSBC and Commerzbank, and insurer AXA. He also served as chair of the Atlantik-Brücke, a lobby group working on improving German companies’ access to the US market.
In 2016, at the age of 60, he moved on to become chairman of the supervisory board of the German branch of US investment company BlackRock. As chief lobbyist of the world’s largest asset management firm’s German branch, he would facilitate direct meetings with ministers from Merkel’s government for BlackRock, including with then-finance minister Olaf Scholz. Then, in 2018, he launched a first unsuccessful bid to head the CDU after Merkel stepped down as party leader. After failing for a second time ahead of the previous election, Merz’s efforts ultimately paid off and he took over after the party incurred its worst-ever election result in history in 2021. Merz ran on the promise to mark a clear end to the Merkel era and “support the CDU in its renewal” towards a more conservative line.
“Europe waits for a greater German presence – and I‘ll deliver it"
Several of Germany’s former government members, after their political career, moved on to high-paying positions in the private sector. This includes the notable example of former SPD chancellor Gerhard Schröder with his job at Russian Gazprom or former vice-chancellor Philipp Rösler from the FDP and his role at the World Economic Forum. However, moving in the opposite direction and taking over a party and possibly also the federal government after a lucrative tour in the corporate world is setting Merz apart from previous candidates for chancellor.
While the CDU leader himself and many of his supporters regard his extensive stint in business as an advantage and proof of his economic expertise, it has repeatedly been singled out by critics as proof that he is unfit to distinguish commercial interests from his political mandate and represent the interests of the public. According to investigative outlet Correctiv, Merz’s industrial ties are particularly strong to the steel and the chemicals sector. Early on in his career, after graduating in law, Merz worked as a consultant for the lobby group German Chemicals Industry Association (VCI) and repeatedly represented the world’s largest chemicals company, BASF, as a corporate lawyer.
Industry leaders warn Merz not to put axe on climate regulation
In its Agenda 2030 economic policy programme, published in early 2025, the CDU calls for “pragmatically develop” EU regulation in a way that emphasizes competitiveness. The party explicitly targets regulation on chemicals and the carbon border adjustment mechanism CBAM , of which BASF has been a longstanding critic.
Asked about how his employment at BlackRock had influenced his view on sustainability and climate action after leaving the company in 2020, Merz said the US investment heavyweight had been “the first to address” ecological and social aspects in its business. While the company had been a vocal advocate of the so-called ESG (environmental, social, governance) criteria for sustainable investment, BlackRock faced criticism for only paying lip service to sustainability and despite while it continued to be heavily invested in emissions-intensive industries. Its commitment to sustainable finance practices gradually waned in the following years before the company exited the Net Zero Asset Manager group in the course of a mass withdrawal from ESG networks in the US finance industry following the re-election of president Donald Trump.
Irrespective of his former employer’s strategic commitments, Merz’s long-term acquaintance Heinen-Esser said the chancellor candidate "knows about the opportunities offered by green technology” for Germany’s economy thanks to several successful companies in his constituency in the rural Sauerland region. This would be an insight Merz shares with the Federation of German Industries (BDI), the country’s largest heavy industry lobby group. Green technology would be Germany's best bet to remain an industrial leader, with targeted and resolute state support needed to navigate a crucial period on the path to decarbonisation, the BDI stated in a 2024 report.
However, the CDU frontrunner’s ideas on energy transition policy details have done little to reassure the business community on several occasions during the campaign. Merz pushed the conservative party to agree to repeal Germany’s Building Energy Law – without spelling out what should replace the hard-fought compromise made in 2023 by Scholz’s government that brought a first near-collapse for the coalition. The heating industry ultimately was content with having a framework that allowed preparing for the scale-up of low-carbon technologies. It therefore called on the next government to not axe to existing regulation and allow the market to adapt.
In early 2025, Merz irritated steel industry representatives by questioning the viability of shifting production procedures away from fossil gas towards green hydrogen made with renewables. The move towards ‘green steel’ likewise had been a key achievement of the previous government and more specifically of Green economy minister Robert Habeck. Merz said capturing emissions would perhaps offer a more readily available alternative, prompting company representatives to warn the CDU leader that millions of investments are on the line if there is another shift in strategy for preserving the sector.
Since the the country successful phased out nuclear energy in 2023, which the CDU itself decided more than a decade earlier, Merz’s party has since taken a bullish stance, suggesting that a fast re-entry in the technology was possible. However, following a rejection by former plant operators and unanswered questions regarding the measures legal, financial, and technical viability, the CDU toned down its ambition to promising an “expert review” of its nuclear ambitions. Merz himself cut expectations even further by saying a re-entry was becoming more unlikely every day.
Merz so far has largely styled himself as a fiscal hawk who would only allow minor changes to Germany’s national limit on new borrowing, the debt brake, to facilitate increased spending for climate and decarbonisation projects. This question was key to bringing down Scholz’s government after a court ruling, initiated by the CDU, declared large parts of its budget earmarked for climate and transformation measures as unlawful, Yet, the Conservative’s manifesto was found to cut the budget by about 90 billion euros, a much larger fiscal effect than the plans of the SPD and the Greens, research institute IFO said. Consequently, the CDU leader softened his stance on allowing more debt.
Next chancellor could tip the balance on EU Green Deal's level of ambition
In Europe, Merz has sought to retain the stereotypical image of Germany’s fiscal discipline, calling last year’s Draghi report on boosting the EU’s competitiveness as a “debt spiral” and promised to “do everything to prevent” joint borrowing in the bloc. Yet, the arrival of Merz at the helm of the EU’s largest economy could still be a welcome change for many of Germany’s European partners.“The Scholz government has been perceived as rather indecisive by many EU partners and there is some frustration over the lack of leadership from the bloc’s largest member,” Jannik Jansen, economic transformation expert at the European policy think tank Jacques Delors Centre (JDC), told Clean Energy Wire.
“Europe waits for a greater German presence – and I‘ll deliver it,” Merz said in January.
Frustration with Scholz’s coalition government grew in Brussels over the increasing number of so-called ‘German votes’ in EU decisions, an ironic label for abstentions that occurred on several occasions in recent years because outgoing government backtracked from earlier agreements at the last minute. “Like others before him, Merz has promised to end the practice,” Jansen said, adding that the coalition the CDU might find itself in after the vote would play an important role in determining whether this promise can be kept.
A more coherent European approach to climate and energy, as well in other areas, is likely become ever more necessary, given the ongoing challenges posed by Russia’s aggression in Ukraine – and the new ones posed by the return of Donald Trump as US president. On Trump, Merz said he would not like to see “any European leader to go to Washington D.C. without having tried to coordinate what we are telling them.” As soon as Europe had a common position, “we are seen as a strong partner in D.C.,” he argued. Yet, Merz’s decision to force a vote on migration policy in Germany’s parliament in January without considering that this could be viewed as an indirect cooperation with the far-right Alternative for Germany (AfD) is putting Merz’s instincts regarding European cohesion into question, Jansen said.
Germany’s domestic politics so far have been regarded as having a stable ‘firewall’ towards collaboration with the far-right, with Merz positioning himself as a defendant of that principle. The recent vote has shattered this perception.” Beyond the symbolic impact of voting together with the far-right AfD for the first time, also the CDU chief’s migration proposal’s content caused irritation: “These ideas ran counter to a joint-EU approach and sent a troubling signal after years of negotiations on the issue,” he added.
Jansen added that Merz is not perceived as a green champion in Brussels – which potentially could have consequences for the bloc’s overall climate ambition. “Among European conservatives, momentum for scaling back the Green Deal is already building, and as potential German chancellor, Merz is unlikely to stand in the way,” the JDC fellow said. Even if the CDU so far had resisted calls coming from other governments to delay a reform of the EU emissions trading system (ETS), the bloc’s central emissions reduction mechanism, Merz’s stated aim to put economic recovery and competitiveness front and centre could still stifle ambition, Jansen said.
Some of the positions advocated by Merz’s CDU, such as reversing the 2035 ban on new CO2-emitting cars or relaxed vehicle fleet emissions limits “don’t reflect the interests of all EU partners, but this push is likely to move forward regardless,” he argued. Much would depend on the EU Commission’s stance, Jansen said. “The composition of the European Parliament has changed and there is no longer a progressive majority without the European People’s Party” (EPP), the CDU’s Conservative European party family.
“The momentum for climate action seen after 2019 that ushered in the Green Deal with conservative support has faded,” he argued. A recent position paper published by the EPP after a meeting hosted by Germany’s Conservatives in Berlin suggested that the group’s zest for climate action has indeed cooled. The EPP called for the removal of mandatory renewable energy targets, the postponement of the CBAM mechanism and a cut of “bureaucracy and over-regulation.”
Considering the stated determination to loosen regulation and put a greater emphasis on the economy, climate policies that the CDU has clearly committed to, such as the ETS, are becoming ever more important cornerstones of Europe’s climate ambitions. But market-based approaches such as emissions trading tend to also come with downsides. “Without substantial accompanying climate measures, this approach is set to fuel conflicts over burden sharing and social justice,” Jansen said, confirming other experts’ impression that the question of who pays what for decarbonisation will quickly surface as one of the next German government’s key policy questions. “Conservative parties will have to clearly state how exactly they plan to address these challenges.”
Merz has not been outspoken about the need to address the social costs of the energy transition – but was asked to comment on the issue in a TV debate with Scholz in early February. In the debate, Merz said his party was preparing a so-called ‘climate bonus’ of 200 euros of monthly payouts per household funded with the proceeds from carbon pricing – a statement that the CDU took back just a day later as Merz got the numbers wrong.
