Prospective new German government shows no ambition to speed up coal exit

Germany's prospective new coalition government does not want to pursue the outgoing government's aspiration to pull the country's coal exit forward to 2030 from the official 2038 deadline. In leaked documents summarising provisional agreements between the conservative CDU/CSU alliance and the Social Democrats (SPD), the parties said "we are sticking to the agreed phase-out path for lignite-based electricity generation by 2038 at the latest."

The outgoing coalition government had originally said it wanted to pull the exit forward, "ideally" to 2030. This date is not mentioned in the provisional agreements.

The conservatives and the SPD are in the midst of formal coalition negotiations, and the leaked paper summarised preliminary agreements reached in the first round of talks, which will now be discussed in more detail by senior party leaders in the "core negotiating group", which could still result in major changes. Many of the proposals also still depend on financing.

The draft texts agreed in multiple topic-specific working groups – which include climate and energy, and transport, infrastructure and construction – are meant to form the basis for a formal coalition agreement, which the parties aim to present in April or May at the latest.

The draft shows that the parties plan to remain committed to Germany's climate targets, including the goal of making the entire country climate neutral by 2045. However, the document also revealed that many issues, including the introduction of a speed limit, the deconstruction of decommissioned nuclear power plants, as well as the use of carbon capture in all industrial sectors, remain contentious, according to media reports.

In a first round of exploratory coalition talks, which preceded the current formal negotiations, the parties had already agreed on expanding renewables, reducing electricity prices for industry and households, and building 20 gigawatts (GW) of gas-fired power plants to serve as backup capacity in an electricity system based on renewables. These agreements are mirrored in the negotiation papers. [See our factsheet on the results of the exploratory talks here].

Here is a brief overview of preliminary agreements contained in the leaked documents:

Energy

• Build 20 gigawatts (GW) of gas-fired power plants by 2030, preferably in existing locations, to serve as a backup in a renewables-based electricity system
• Phase out coal power by 2038 "at the latest"
• Renewable electricity and storage additions should primarily be "grid-friendly" and "market-oriented"
• Expand solar, wind, biomass, hydropower and geothermal energy
• Explore possibilities for the "dual use" of solar power, such as photovoltaics (PV) above parking lots, agri-voltaics and floating PV
• The CDU/CSU wants to "exploit the potential of conventional gas production in Germany"
• CDU/CSU insists on examining the possibility of reopening the most recently closed nuclear power plants
• CDU/CSU favours scrapping the two percent land use target for onshore wind and replace it with a green power target – the SPD favours keeping it
• Introduce a "technology neutral" capacity mechanism in the electricity market
• Grid expansion should be based on "realistic" demand forecasts based on regular monitoring
• CDU/CSU advocates for building new power grid lines overhead "where possible", while SPD would prefer to retain priority for underground cables
• CDU/CSU wants to retain a single power price zone in Germany, while the SPD calls for examining the possibility of several electricity bidding zones from an efficiency point of view

Industry

• In addition to making carbon storage (using CCS) possible offshore, onshore storage should also be possible "where geologically suitable and accepted", giving CCS/CCU plants and pipelines an "overriding public interest" status
• CDU/CSU favours expanding the use of CCS/CCU not only in sectors that are hard to decarbonise, but in all industrial sectors and gas-fired power plants
• Reduce grid fees and bring electricity tax to the European minimum
• Introduce an "industrial electricity price" for energy-intensive industries that cannot be otherwise relieved
• Create "lead markets" to ramp up hydrogen demand

Heating

• It is unclear to what extent the "heating law" will be amended or abolished, but both parties have signalled their wish to make changes
• Increase funding for the climate-friendly conversion of heating supply and promote the expansion of district heating

Transport

• Keep the regional monthly public transport "Germany ticket", but increase the price from 2027 in a "gradual and socially responsible" manner
• No agreement on the introduction of a speed limit in motorways
• Use European trains with long-distance standards to improve connections to European neighbours

Society

• Introduce instruments "to avoid carbon price hikes" for consumers and companies as Germany moves from its national carbon price for heating and transport to the EU Emissions Trading Scheme II from 2027
• Use EU Social Climate Fund to support lower income households as carbon prices rise

Emissions trading

• Use carbon pricing "as a central component" for competitiveness and climate protection

Environmentalists warn of a "massive step backwards" in climate protection

Climate action advocates warned the provisional results could result in a large setback for the country’s emission-cutting plans. “Apart from some good ideas, we see several massive blind spots and real dangers for climate policy in this text,” said Christoph Bals, policy director at environment and development NGO Germanwatch. “If these passages were to be included in the coalition agreement, there would be a massive step backwards in climate protection and the future-proof modernisation of our country.”

In particular, Germanwatch criticised what it said was an “attempt by the CDU/CSU in the negotiations to achieve part of the German and European climate targets through questionable CO2 credits from other countries without limits.” It added this approach would not only move Germany and the EU away from the goal of meeting climate protection targets at home, but also undermine the necessary innovation incentives. “Shifting our own responsibility onto other countries would be unfair,” Bals said. His NGO welcomed the support promised in the draft text for EU emissions trading for building and transport emissions from 2027, but said accompanying climate protection measures were insufficient.

Electricity company Octopus said it was “obvious that climate protection will now take a back seat to goals such as security of supply and affordability,” adding that an agreement on a “grid-friendly” renewables rollout “could become a hidden brake on expansion”. The company also saw a lack of measures to achieve the overarching target of a cost-efficient and sustainable energy system, and said the aspiring coalition partners were planning an “outsized” addition of gas power plants.

Renewable energy association BEE said that the results of the negotiations pointed in the right direction, but was particularly critical of possible plans to abolish Germany's "heating law", legislation to gradually phase out oil and gas boilers. "We are very critical of the fact that its abolition is now being demanded again," said BEE head Simone Peter. "SMEs have already invested large sums in the production of renewable heating technologies, citizens have been looking at alternatives to fossil-fuelled heating […] and need guidance for replacing heating systems without zigzagging […]"

This warning against plans to abolish the "heating law" was echoed by six environmental associations, including the umbrella organisation DNR, Greenpeace, WWF Germany and Germanwatch. "Even today, the existing measures are not sufficient to achieve the climate targets in the building sector – we simply cannot afford to go backwards," said DNR political director Tobias Pforte-von Randow. "Abolishing the law would not only lead to massive uncertainty, but would also further cement dependencies on fossil fuels."

Green transport association VCD welcomed the planned expansion of rail infrastructure and the continuation of the "Germany ticket", but lamented plans to reduce air traffic tax, ambiguity on funding for public transport, and the lack of agreement to implement a speed limit on Germany's motorways. "It was already clear from the exploratory paper that hardly any major leaps in transport and climate policy can be expected from the coalition government," said VCD chairwoman Kerstin Haarmann. "Walking and cycling are neglected in the paper."

The economic think tank Forum Ökologisch-Soziale Marktwirtschaft (FÖS) was critical of the preliminary agreements, saying they did not represent increased climate ambition. "The reintroduction of the energy tax reduction for agricultural diesel, the increase in the commuter allowance and the reduction in aviation taxes are not a boost for climate protection, but rather a brake on it," said executive director Carolin Schenuit.

The green economic think tank was particularly critical of planned reductions in electricity prices for only benefitting households with high consumption; of the idea of not including emissions from agriculture in emissions trading; and of the potential excuse for delays in renewable power expansion by requiring new capacity to be grid-friendly.

Julia Verlinden, Green Party member of parliament, said that the interim coalition negotiation results "show that combating the climate and biodiversity crisis is not an urgent concern" for the negotiating parties.