German government gets mediocre mid-term marks for climate effort
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- German Renewable Energy Federation (BEE) - Simone Peter, president
- German Energy Agency (dena) - Andreas Kuhlmann, chief executive
- E3G - Alexander Reitzenstein, climate & energy policy advisor, and Felix Heilmann, researcher
- German Association of Local Utilities (VKU) - Katherina Reiche, chief executive
- German Wind Energy Association (BWE) - Hermann Albers, president
- Association of German Chambers of Commerce and Industry (DIHK) - Sebastian Bolay, head of power market and renewable energies
- Mercator Research Institute on Global Commons and Climate Change (MCC) - Brigitte Knopf, secretary general
- WWF Germany - Michael Schäfer, head of climate and energy policy
- Germanwatch - Christoph Bals, policy director
- Kiel Institute for the World Economy (IfW) - Sonja Peterson, scientific director
- Federation of German Consumer Organisations (vzbv) - Thomas Engelke, head of energy and construction
- Aurora Energy Research - Casimir Lorenz, senior associate
German Renewable Energy Federation (BEE) - Simone Peter, president
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Three. The first draft laws have been presented and a CO2 pricing system has been introduced, but the framework and content do not suffice in the least to reach the climate and renewables expansion targets.
What is especially positive and what are the government’s shortcomings?
Following a lengthy delay on the energy and climate decisions, the federal government has finally gotten important legislation off the ground these past few weeks – also under the massive pressure of the Fridays for Future movement. Still, the 2030 climate targets remain far beyond reach with the measures in the Climate Action Programme 2030, the building energy law, or the national emissions trading system. The German government remains discouraged and leaves the great potential of renewable energy for greenhouse gas reduction, future-proof jobs and regional development untapped in many areas. Wind power development is even being dangerously slowed down and the industry is facing massive job losses. Although national emissions trading for heat and transport is a first step towards creating fair competitive conditions for clean technologies, the entry-level price of 10 euros is far too low to provide the necessary impetus for investment. The energy act for buildings will not bring about any additional climate action effect in the sector. In addition, climate action measures in the heating sector will be counteracted by the fact that, for example, fossil heating systems will continue to be supported by the state.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
The coal compromise agreed in January must lead to a coal phase-out law and be linked to a concrete timetable for an ambitious expansion of renewable energy by 2030. With the current Climate Action Programme 2030 the grand coalition's goal of increasing the share of renewable electricity to 65 percent by 2030 will be missed. Renewables must compensate for the phase-out of nuclear power and coal, and they are supposed to provide clean electricity for sector coupling – from e-mobility to heat pumps or power-to-gas. This requires a correction of the projected electricity demand and a significantly faster expansion of renewables. The CO2 price must be increased to bring the heating and transport sectors in line with climate action. All this would also be possible in a socially fair way, if one only wanted to. The opportunities offered by the energy transition to municipalities, rural areas and companies are enormous. However, the possibilities of flexibilisation, digitalisation and decarbonisation in the energy market must finally be seized. The renewable energy sector stands ready.
German Energy Agency (dena) - Andreas Kuhlmann, chief executive
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Right in the middle with room for improvement. Much has been initiated, now it is about good and speedy implementation.
What is especially positive and what are the government’s shortcomings?
Many important topics have been tackled and some progress has been made. The coal exit by 2038 is a consensus-based decision, and implementation is on its way. The power grid action plan and the reform of the grid expansion acceleration law make it possible to better use and expand the grid. With dena’s Grid Study III, the federal government supports a project that for the first time involves truly integrated infrastructure planning. The 2030 gas dialogue process has finally led to new prospects for gas supply. With it, hydrogen and the deriving renewables-based fuels and base materials are moving increasingly into focus. The German government's hydrogen strategy is due out this year. There has been a shift of mind, which I very much welcome. Today, it’s much more about technology options than in the previous legislative period.
And finally, the Climate Action Programme 2030 contains a number of important instruments, above all the widened CO2 pricing and accompanying programmes that create options for consumers and industry to switch. But this will probably not be enough to achieve the 2030 climate target or much less climate neutrality by 2050. What has been politically possible for the grand coalition so far is not yet enough to make possible what is necessary for climate protection and the energy transition.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
I can imagine that many would be extremely annoyed if what has just taken a lot of effort to prepare cannot be implemented in the end because the legislative period is much shorter than it should be. I, too, would find that regrettable, because we have no time to lose when it comes to energy transition and climate action. Valuable time was already lost at the start of the term, because coalition negotiations had to be conducted twice. A great deal remains to be done during the second half.
The exit from coal and the climate package pose numerous and complex challenges - in all sectors, including with a view to a practicable and reliable framework law. It is important that the government brings order and clarity to the processes and thus creates confidence in the ability to shape things. This has been somewhat undermined in recent years.
Permanent uncertainties about the stability of the government are obviously not helpful. Another important consideration is Germany’s European Council Presidency in 2020. This offers a lot of potential.
E3G - Alexander Reitzenstein, climate & energy policy advisor, and Felix Heilmann, researcher
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Four.
What is especially positive and what are the government’s shortcomings?
During the past few months, the climate crisis has finally been moved to the core of politics. However, the government has so far missed the opportunity to support its ambitious partners at EU level and regain climate leadership at the international level. With its climate package, the grand coalition government has made the first steps to accelerate action in all sectors with some good results, for example by removing the support cap for solar PV and establishing a Climate Action Law with legally binding sectoral targets. However, the proposed measures also prove that the coalition has not yet internalised that a systemic transformation is necessary to move to a net zero emissions economy. The proposed package is piecemeal, lacks the necessary ambition - for example, it fails to set a sufficiently high carbon price, and even worsens the regulatory framework in certain policy fields, such as onshore wind. While ambition has been watered down over often rhetorical concerns about the social implications, the current package does not ensure planning security and a just transition for the affected communities. Instead, it benefits higher income households and increases ineffective fossil fuel subsidies, such as the tax relief for largely rich commuters.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
The climate package tabled is insufficient to reach the domestic or international climate targets, and Germany does not yet support the EU’s goal of reducing emissions by 55 percent by 2030. With this deal, Germany will enter the “ambition year” of 2020, culminating in the German presidency of the Council of the EU, the EU-China summit, the enhancement of the Nationally Determined Contributions (NDC) and COP26, carrying a major burden.
Slow and insufficient action today will later result in disruptive, unjust action, and in increasingly uncontrollable impacts of climate change. The government must approve and implement key measures without delay, such as the coal phase-out and the climate action law. At the same time, the ratcheting up of ambition is inevitable, including a transformative climate innovation and investment package, significantly higher CO2 prices, and a just transition plan that ensures industrial competitiveness and social cohesion in the net zero economy. There is no more time for rhetoric, key ministers must prove concretely how they plan to protect the people and shape the transformation. Finance minister Olaf Scholz, for example, could immediately support excluding all fossil fuels – also natural gas – in the European Investment Bank’s energy financing guidelines on 14 November. Without further action, it will be hard to justify the continuation of the grand coalition within and beyond the governing parties.
German Association of Local Utilities (VKU) - Katherina Reiche, chief executive
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
The government faces a broad spectrum of challenges in climate action. In our view, there is real progress in some areas, while there is potential for improvement in others. Even if an assessment in the form of a mark does not fully reflect the complexity of these challenges, the rating of 5 appears to be fair.
What is especially positive and what are the government’s shortcomings?
In recent months, the federal government has focused its climate policy on the Climate Action Programme 2030. Here a differentiated assessment is needed. The central instrument of this programme is the national emissions trading system. It is good that in the future there will be a CO2 price in sectors not yet covered by the ETS. However, the German government should have had the courage to introduce cross-sector carbon pricing and to combine this with a reform of taxes and levies in the energy sector.
From our point of view, the minimum distance rules for onshore wind energy are extremely problematic. They will not lead to more acceptance, but to a worsening of the current expansion crisis in wind energy. In order to achieve the 65 percent renewables target by 2030, we urgently need action to improve the development of wind energy. There are also many positive aspects to the Climate Action Programme 2030, such as electric mobility, charging infrastructure and sector coupling. However, progress depends on concrete legal implementation, which must now be pushed forward quickly.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
The federal government's list of tasks for the second half of its term in the field of energy policy is long. To give one example: the implementation of the coal compromise has taken too long. The government must step up its pace here. This also applies to the planned coal exit law. Above all, however, this also applies to the other measures proposed by the coal commission in order to achieve the climate targets and at the same time to ensure security of supply and affordability. These include especially rapid improvements for cogeneration (CHP) and heat networks. The reduction in coal-fired power generation can only succeed with a switch to gas. If companies are to invest, this fuel switch must be incentivised. Also, the framework conditions for the expansion of onshore wind energy must be improved. We must overcome the expansion crisis of wind energy. Together with other associations, the VKU has proposed measures to this end. The government must act quickly here.
German Wind Energy Association (BWE) - Hermann Albers, president
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Three.
What is especially positive and what are the government’s shortcomings?
The coalition agreement from 2018 presented a good foundation. The special renewables auctions were implemented with a package of energy legislation reforms at the end of 2018. The timeline and volume framework needed to reach the 2030 renewables target of 65 percent, however, is still lacking. Even worse, the government creates a green power gap by assuming much too little electricity consumption by 2030 and has thus reduced the wind power expansion targets in the Climate Action Programme 2030. Thus it endangers the German industry’s decarbonisation efforts, and this is not in line with today’s challenges. More and more companies are switching to renewables and want to have access to wind energy supply. Politicians do too little to support the industry down this path.
The economy minister has organised a wind summit in light of the dramatic situation in to the field of wind power expansion. All that came from it, however, was a list of non-binding tasks, which address important issues but also create new blockades in connection with the coalition’s compromise on minimum distance rules.
The Climate Action Law and the Climate Action Programme 2030 have put Germany on the path for CO2 pricing, but this is not enough. The BWE had called for an entry-level price of 60 euros per tonne of CO2 – also for the power sector. Now we will have 10 euros per tonne.
The bottom line: the grand coalition acts inconsistently and hesitantly. This is also a reason why about 40,000 high-skilled jobs have been lost in the growing wind energy sector since 2016. The German wind energy sector is facing a fate similar to that of the solar sector, where jobs have been cut on a massive scale and moved to other countries. The federal government is in the process of gambling away the technological edge of the wind industry.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
We urgently need sufficient amounts of land and permits for onshore wind parks in order to return wind expansion to a level at which future power demand can be met and Germany’s 2030 climate targets be reached. We call for a positive campaign by the government about the opportunities offered by the energy transition, instead of new restrictions like minimum distance rules. The wind summit’s reform proposals to reduce permit hurdles must quickly be moulded into legislation. It is about the genuine participation of local citizens and incentivising industry innovations. For this, we need a reform of the renewable energy taxes and levies. The government must preserve and develop the wide value-creation chain of wind energy in Germany, which is why we demand a strategy for the renewable industry in Germany and Europe. That is the only way to resolutely tackle new technologies, such as storage and power-to-gas. Without such a strategy, we threaten to lose our technological advantage to other countries, as we did in the IT sector and on e-mobility.
Association of German Chambers of Commerce and Industry (DIHK) - Sebastian Bolay, head of power market and renewable energies
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
The planning security of businesses in all economic sectors is suffering under the disputes among the coalition partners. This is especially apparent in energy and climate policy: the “Working Group Acceptance” - set up by the parliamentary groups to accelerate the expansion of renewables [in light of local citizen opposition] – has held meetings for months without delivering results. Ways to tackle this issue then had to be decided at the highest level as part of the government’s climate package on 20 September. Thus, the coalition’s mid-term review is very mixed with lots of room for improvement. In addition, a lot is in the pipeline, but has not yet been implemented.
What is especially positive and what are the government’s shortcomings?
On the positive side, there is an agreement on CO2 pricing for those emissions not covered by the EU ETS. Now, affected companies at least know where they stand and what additional burden they will face. Many businesses will thus invest in climate action over the coming years, so long as there are cost-efficient or technological alternatives.
However, there is a lack of other important strategic decisions in terms of the exit from coal-fired power production or climate action in the industry, for example through better framework conditions for self-supply. Above all, the government has so far failed to stipulate sufficient compensation for companies particularly affected by the national emissions trading scheme. The announced negligible decrease of the renewables levy is not enough to fend off damage to the economic location Germany caused by a lack of investments. The fact that there is no cost-efficient alternative to natural gas for process heat is a problem for the industry.
On renewables expansion, the government could have come clean. Instead, it raises the expansion target to 65 percent of power consumption by 2030 but introduces a general minimum distance of 1,000 metres between a wind turbine and the nearest settlement. Thus, it is very doubtful whether the 2030 target will be reached, especially if power consumption increases.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
For now, the government lacks a strategy for how emissions in the industry could be lowered without endangering the competitiveness of Germany as an industrial location. This is especially apparent in the Climate Action Programme 2030. In terms of industry, it merely mentions support programmes for energy efficiency and waste heat utilisation, which in part already exist.
To make progress in this regard, we propose a triad of measures for the second half of the legislative period. First, more businesses must be supplied with green electricity. For this to happen, the renewables levy on self-supply must be abolished and a sensible regulation be introduced to differentiate third-party electricity volumes on company premises. In addition, the power tax must be reduced to the European minimum, when certified green electricity is supplied regionally. Secondly, the existing exemptions for electricity must be secured in the long run. This makes conducting talks in Brussels necessary to overhaul the EU’s state aid guidelines. The businesses also need additional shelter against the backdrop of looming burdens on process heat. The third priority is a large-scale research and investment offensive to switch process heat to other energy sources. Germany can be a global role model with such a programme. This is a big task for the grand coalition.
Mercator Research Institute on Global Commons and Climate Change (MCC) - Brigitte Knopf, secretary general
What is especially positive and what are the government’s shortcomings?
The only positive message is that Germany has now decided to introduce carbon pricing at the national level in the non-ETS transport and heating sectors. However, this introduction is too timid: the price is too low and it does not reach far enough into the future for a sufficient steering effect to unfold and to provide the necessary investment security. Overall - also taking the additional measures into account - the climate package presented by the federal government is likely to be insufficient to meet the 2030 targets.
Additionally, the issue of social balance in German climate policy has not yet been solved satisfactorily. It is apparent that the middle class will be most heavily burdened, and while the burden on poorer households will be cushioned, their compensation is still insufficient. This is where cases of particular hardship will occur. Social imbalance will worsen dramatically when carbon prices begin to rise, which is expected from 2026 onwards.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
It is crucial that Germany now takes a more active role in European climate policy. In parallel with its national introduction, Germany should push ahead with the introduction of an integrated Europe-wide carbon pricing system in order to prevent fragmentation and correspondingly high costs of European climate policy. The European debate on increasing the climate target for the year 2030 towards 50 or 55 percent emissions reduction, initiated by the new European Commission, will provide a good starting point for this in the near future. Major political events are Germany’s Presidency of the Council of the EU in the second half of 2020 and the COP26 in Glasgow that should be used to agree a more ambitious and coherent European climate strategy. Germany should take a leading role here.
WWF Germany - Michael Schäfer, head of climate and energy policy
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Three.
What is especially positive and what are the government’s shortcomings?
The government has finally faced the problem of coal – but the path for phasing it out has to be improved during the next term. The proposed climate law is a second plus, something for which we have advocated for years. But the coalition has failed to take sufficient measures to reduce emissions. The current deal will only give us about a third of the reductions necessary to reach the government target for 2030 – which is already set too low. The 2020 goal will be pushed back about five years, which spectacularly shows the shortcomings of the government’s climate policies. This result is incredibly weak, especially considering the powerful youth movement demanding much more – not to mention the scientists and even industry leaders.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
The government must support European Commission President Ursula von der Leyen’s efforts to raise Europe’s contribution to the Paris Agreement and to adopt an ambitious long-term EU strategy, which will aim for climate neutrality by 2050 at the latest. Nationally, we urgently need to expand wind power – an industry that has been brought to its knees by poor politics. Without more wind power, Germany can bury all its other goals – climate-friendly energy, mobility and industrial sectors – and it risks being outpaced internationally. We also need the right frame for a carbon-neutral industry that allows stakeholders to make informed decisions today and guarantees economic well-being for branches like steel and chemistry in Germany.
Germanwatch - Christoph Bals, policy director
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Considering the commitments enshrined in the coalition agreement to achieve the 2020 emissions reduction target as fast as possible as well as the 2030 reduction target and to put it all into legislation in 2019, the outcome is not sufficient. Now we expect that the 2020 target will not be reached before 2025. At most, half of the reductions foreseen for 2030 are guaranteed with the agreed package. So, we would give 2-3 points out of 10. 10 points would be given for a strategy in line with the 1,5°C-limit.
What is especially positive and what are the government’s shortcomings?
The current climate package includes the Climate Action Law, the Climate Action Programme 2030, making the renewables expansion target official, the coal phase-out and the introduction of a CO2 pricing system. It is still geared to what is possible in this coalition, rather than making possible what is necessary to implement the climate targets of the Paris Agreement.
The package does not guarantee that Germany achieves the 2030 climate targets. The architecture is not bad - CO2 price, climate law with annual monitoring and the possibility to raise ambitions, an additional package of measures. But the entry-level CO2 price is designed in homeopathic doses, which cannot achieve a steering effect. Gross electricity consumption in 2030 is set on the same level as today at 590 terawatt hours (TWh) despite the assumption by many experts that demand will increase due to sector coupling. However, this will impact the targeted share of 65 percent renewables in power consumption. Renewables expansion is additionally obstructed by further barriers, such as the 1,000-metre minimum distance regulation for wind turbines. The Climate Action Law was watered down compared to its draft from February: The autonomy of the council of experts was cut back, for instance, and the vow to align state capital investments with sustainability criteria was cut.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
We see three main climate policy priorities for the German government for the next two years:
- The expansion strategy for renewable energies in Germany must be strongly and quickly improved
- At EU level, we need Germany’s support for a 55 percent greenhouse gas reduction target by 2030 (in the context of the German presidency of the Council of the EU)
- Germany, France and the EU should negotiate with India, China, South Africa and other relevant international partners to improve their respective climate targets for 2030 and 2050 – and cooperate in implementation. This focus is a necessary addition to the EU‘s role as a frontrunner at home – and is most relevant to reaching a peak of global emissions soon and to keeping the Paris Agreement goals within reach
The governing parties need to dare to find serious answers to the two key geo-social questions of the climate crisis: intra and intergenerational justice as well as justice between rich and poor. The world’s richest 10 percent produce 50 percent of the planet’s CO2 emissions.
Kiel Institute for the World Economy (IfW) - Sonja Peterson, scientific director
1. On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Four.
2. What is especially positive and what are the government’s shortcomings?
The most important measure to achieve cost-efficient and effective emission abatement and to incentivise necessary infrastructure investments, structural change and innovation is carbon pricing. Thus, the Kiel Institute regards the extension of carbon pricing beyond the European Emissions Trading Scheme (EU ETS) as the German government’s most important measure. Furthermore, the chosen architecture with an ETS in the heat and transport sectors and the German – French initiative to couple such national ETS, to later vertically integrate them into the EU ETS and to introduce minimum prices are exactly what we proposed as steps towards a uniform and all-encompassing EU carbon price. We also proposed Border Carbon Adjustment to avoid negative competitiveness effects for industry, which is now being considered.
On the negative side, the starting price for carbon is too low and real emissions trading starts too late. Also, the government is not taking carbon pricing as the lead instrument but plans to implement a number of overlapping, partly counterproductive and often expensive command-and-control measures. Finally, the rights of the expert commission are too limited so that it cannot follow the good example of the UK Committee on Climate Change that has strongly contributed to the UK’s successful emission abatement.
3. Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
Any future government should take care that carbon pricing is developed nationally and Europe-wide as currently envisaged and that emission allocation within the emission trading systems are in line with the ambitious long-term reduction targets. The government should also support the EU initiative to become carbon neutral by 2050.
Federation of German Consumer Organisations (vzbv) - Thomas Engelke, head of energy and construction
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Two.
What is especially positive and what are the government’s shortcomings?
On the positive side:
- the German government has finally acted after years of quasi standstill in energy and climate policy
- the planned tax bonus for energy-efficient building modernisation, although the amount is far too low
- the obligatory energy consultation by consumer organisations ahead of extensive building modernisations
- the strengthening of German rail company Deutsche Bahn
- the support for public transport
- the increase of the air traffic tax
On the negative side:
- the government is doing too little in terms of climate action; the climate package is insufficient to reach the 2030 targets, and the climate effects of the individual measures are questionable
- the absence of a convincing master plan (for example, in transport, the announced investments in rail and public transport might come too late and not be enough to offer real alternatives)
- the government does not sufficiently take into account consumers (for example, the revenues from CO2 pricing will not fully be returned to consumers – neither is there a climate premium or a sufficient decrease of the renewables levy)
- the CO2 pricing system/compensation is socially unfair, and its costs are unfairly distributed between private households and businesses
- it is still unclear to which extend companies will be exempt, and whether this will be financed by consumers
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
The federal government must correct the deficits mentioned above. This is the only way to secure consumer approval in the long term. The grand coalition must also ensure that
- Germany achieves its 2030 climate targets
- consumers will not yet again finance exemptions for companies
- climate action is socially fair
- e-mobility becomes more attractive
- consumers benefit from the energy transition’s advantages, e.g. through an improvement of the tenant electricity law
Aurora Energy Research - Casimir Lorenz, senior associate
On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?
Five.
What is especially positive and what are the government’s shortcomings?
On the positive side: the government has committed to climate neutrality by 2050. With the adoption of the Climate Action Law, sectoral targets will soon be enshrined in law and monitored. The reform of the energy taxes and levies system has begun. However, the first steps are very small. For example, the CO2 price for the non-ETS sector is set at such a low level that no short-term effect can be expected. The economy ministry shows a clear commitment to enact the coal commission’s proposal into law.
On the negative side: the current climate package will not be enough to reach the 65 percent renewables share target by 2030. The heating sector is still behind on its targets and no change in this trend can be expected. Deployment rates for heat pumps are far below what would be needed to electrify the heating sector in due time. Even though public resistance towards both grid expansion and onshore wind has been identified as a high priority matter, efforts to change this have yielded no significant result. Onshore wind power auctions are still undersubscribed by two-thirds and no improvement is foreseen.
Assuming that the coalition continues in power, what will it have to accomplish during the second half of the legislative period?
In order to reach the 65 percent renewables share target, the renewables expansion pathway and the corresponding auction volume schedules must be adapted for onshore and PV. To allow onshore wind to contribute to reaching the climate targets, obstacles to the approval process and issues surrounding public acceptance must be solved. Similarly, grid expansion must take place to not endanger the more ambitious offshore wind expansion plans. Lastly, ambitions in the non-ETS sectors must be ramped up as quickly as possible.
