Pro-business FDP upsets coalition partners with demands including end of renewables support

With a set of demands on Germany’s energy transition and social security expenditures, the pro-business government party Free Democrats (FDP) has caused a stir in the coalition of chancellor Olaf Scholz, the Süddeutsche Zeitung reported. Ahead of a party convention at the end of the week, the FDP leadership presented twelve points “for accelerating the economic transition” that include phasing out support for renewable power installations. The newspaper reported that almost all of these points run counter to the joint policy of the coalition. The party leadership argued that renewables are fit for full market exposure and should be exposed "as soon as possible.” Funding for the support for renewables through the Renewable Energy Act (EEG) was shifted from customers to the state budget in 2022. While renewable power installations are expected to bring prices down at times of high input, the support mechanism entails that operators are compensated for the difference to the agreed price through support payments. The EU plans to develop the system further into one based on contracts for difference (CfD), whereby operators could end up paying money back to the state if profits are much higher than expected. The FDP wants to reduce corporate taxes to make money available for new investments and introduce a range of other measures to reduce taxation across the board. Altogether, these measures could cost the state up to 50 billion euros per year in lost earnings, reported the Süddeutsche Zeitung.

Other demands include an end to early retirement schemes and tighter regulation of social security payments. Politicians of the conservative opposition alliance, including members of the CDU and CSU, have called the FDP’s set of demands a “certificate of divorce” for the coalition, reported news agency dpa. However, “this is not really going to become a reality in this government coalition,” said Hubertus Heil, labour minister for Scholz’s Social Democrats (SPD). Heil called the demands mere “FDP folklore” ahead of its party convention. Omid Nouripour, head of the Green Party, said the FDP’s demands are nothing to worry about for his party, as the “different perspectives” of the coalition parties are well known. With respect to the demand for ending renewables support, the head of renewable power industry group BEE, Simone Peter, said a new support scheme would be useful, but rejected individual FDP demands. Renewable power installations would not have to be made ready for the market, as they had already firmly arrived there, she argued.

The coalition government parties have all suffered from losses in popularity since taking office in late 2021. Support for the FDP in particular could drop below the five percent threshold needed to enter parliament. Ahead of the upcoming EU elections in June, the governing and opposition parties have started to resharpen their individual profiles, which can become a hurdle the coalition’s ability to present coherent positions.