German energy minister to change office, takes stock of policies

Weeklies Die Zeit and Stern reported Gabriel would not challenge Chancellor Angela Merkel in this year's election and step down as leader of the Social Democrats, who have been governing in a coaltion with Merkel's conservatives over the past four years. Gabriel was set to become foreign minister, leaving the job at the helm of the Social Democrats to Martin Schulz, former president of the European Parliament.

State secretary in the ministry Brigitte Zypries is set to take over at the helm of the economy and energy ministry, according to media reports.

Shortly before first reports on Gabriel's decision surfaced, he looked back at his tenure at business daily Handelsblatt’s annual energy industry conference. He assured energy industry leaders the energy transition’s impacts on industry and the country’s competitiveness would be minimised and market forces would play a greater role in the sector. He said more must be done to meet Germany’s climate targets, but rejected fixed deadlines to phase out coal or combustion engines.

Germany’s Renewable Energy Act is likely to see further changes in the next legislative period, Gabriel said at the Berlin conference, one of the country's largest gatherings of top-level managers from the energy sector. He added reform would be aimed at ensuring affordable financing of the next phase of the Energiewende, which aims to decarbonise the transport and heating sectors.

Gabriel argued that Germany’s transition towards a low-carbon energy industry had been an overall economic success. While Germany had to “bear the brunt” of the costs of establishing a renewable energy supply, the Energiewende also “created a whole industrial sector” with hundreds of thousands of new jobs and a strong export performance.

Gabriel said the current funding mechanism for renewables under the Renewable Energy Act (EEG) wasn’t enough to expand the energy transition from the power sector to transport and heating and meet the country’s climate goals. For the next steps of the Energiewende, he said he would favour any option “pointing towards more market mechanisms” and that it would be wrong to draw on additional public funding.

Referring to national debates over when to phase out coal-fired power production, as well as combustion engines for newly registered cars, Gabriel said he did “not think much of announcing year dates and who is going to be the fastest”. Policymakers had to bear in mind the consequences for affected industries when proposing measures for climate protection.

The energy transition depends not just on speed but also on systematic rigour and affordability, he warned. “I recommend some realism and a focus on goals that can be achieved without excessive effort and collateral damage.” Workers’ interests had to be taken into account and alternative jobs created by managing structural change, Gabriel said.

The minister’s Social Democratic Party faces a tough regional election in the coal- and industry-heartland of North Rhine-Westphalia in May, seen as a bellwether for the federal elections in September.

Industry players largely welcomed Gabriel’s policy message at the conference. But some doubted the government was really ready to put faith in market mechanisms. The head of the German Energy Agency (dena), Andreas Kuhlmann, said the dynamic of change in the energy sector would only accelerate and a top-down approach was unlikely to succeed.

Susanna Zapreva, CEO of enercity, one of Germany’s larger municipal utilities in the city of Hanover, said taking the whole of society along in the energy transition was the right approach. Florian Bieberbach, head of Munich’s municipal utility Stadtwerke München, said the minister’s move towards meeting the climate targets at a measured pace that took jobs, power prices and structural change into account was positive.

Gabriel used the conference to take stock of his energy policy over the past legislative period as the country heads into the campaign season for this year’s federal elections. He said the government’s key achievement over the recent years was bringing together different Energiewende targets and ensuring “parallel cogwheels interlocked”.

He cited reform of the EEG that introduced a tender-based system for renewable development and the country’s new power market law that “adapts the market to integrating renewable sources” as examples of how the country was moving towards a more cost-efficient, market-based energy transition.

The minister said Germany and other European countries should strengthen domestic development and production of emerging technologies such as battery cell production, which like other microelectronic industries have been largely dominated by East Asia. Battery technology was the “method of choice” for new vehicle engines. It was “in our interest to bring battery development and production back”, Gabriel said.

With respect to the EU’s energy policy “Winter Package,” Gabriel said the EU should engage less in regulatory “micromanagement” and focus on ensuring European competitiveness. He said EU taxes on Chinese solar modules should be upheld, given environmental and social impacts of their manufacture, but pointed out protectionism was not in Europe’s interest.

Gabriel also addressed US President Donald Trump’s first activities in office, saying if the USA were to turn towards an era of economic isolationism, the EU had to “find partnerships elsewhere”. Europe should not emulate American protectionism, Gabriel stressed, and there was no reason for fear in Europe – “let alone submissiveness.”