Germany’s New Coalition Government to Continue ‘Landmark’ Energy Transition

Germany’s prospective government has agreed in its coalition treaty to continue the country’s landmark energy transition without major adjustments and stick to existing climate targets.

Faced with economic stagnation and the geopolitical shake-up after the United States election, the coalition parties—the conservative CDU/CSU alliance under chancellor-in-waiting Friedrich Merz and the Social Democratic Party (SPD)—have put more emphasis on economic competitiveness than climate action, Clean Energy Wire reports. The energy industry praised the continuation of existing policy, while environmental NGOs expressed relief over the treaty’s climate commitments, both on the domestic and the EU level.

The parties aspiring to form Germany’s next government have promised to continue the country’s drive to cut emissions without any major changes to existing energy transition policies. In their highly anticipated coalition treaty, agreed after weeks of negotiations, Merz’s conservative CDU/CSU alliance and the SPD said they will carry on rolling out renewables and stick to the country’s target to be climate neutral by 2045.

The coalition partners also said they would continue support schemes to make industry, buildings, transport, and other sectors more climate-friendly. However, following two years of economic stagnation and recent geopolitical upheavals triggered by the U.S., the parties decided to focus on boosting the growth of Europe’s largest economy—for example, via energy price cuts—while showing slightly less climate ambition than the outgoing government of the SPD and the Greens.

While the business community welcomed the emphasis on competitiveness, cost reductions, and the continuation of climate policy, climate activists said they were relieved that the future government remains committed to climate targets.

“It is a good sign that the coalition is not making a U-turn on the energy transition, but is instead promoting the continuation of energy policy and an innovation-driven course for Germany,” said the head of utility association BDEW, Kerstin Andreae. “The coalition agreement is a basis for the efficient continuation of the energy transition—cost and system efficiency must be the guiding principles in future.”

The coalition treaty paves the way for Merz to become the country’s new chancellor in the coming weeks. “A tough piece of work lies behind us—and a strong plan for Germany ahead of us,” Merz told a media conference in Berlin. He argued that the prospective coalition government’s success would shape “our country’s future and the future of Europe” at a critical point.

The new government looks set to be sworn in around early May, after both the SPD’s members and the CDU’s party delegates have greenlit the coalition treaty.

No Major Surprises

The coalition agreement did not contain major turnarounds or surprises in climate and energy policy, but some controversial crunch points were completely left out of the document. For example, reactivating Germany’s nuclear power plants, an idea championed by the CDU/CSU, was not mentioned in the treaty. In a similar vein, reversing the EU’s 2035 phaseout of combustion engine vehicles and introducing a speed limit on the country’s motorways didn’t receive a mention.

Compared to the previous government, however, the deal showed a slightly lower level of ambition in climate policy, as a more challenging international environment, economic concerns, migration, and the rise of the far right saw climate action decline as a priority. While the coalition treaty of Scholz’s outgoing government mentioned climate nearly 200 times, the word showed up 80 times in the new treaty that will lay the groundwork for Merz’s coalition government.

The new set-up of ministerial responsibilities also signalled that climate action has become a lower priority, as the aspiring government plans to shift the topic from the economy ministry back to the environment ministry.

“We must quickly increase the competitiveness of our economy,” Merz said. “We’ve all understood what has happened there,” he said with a view to Trump’s tariff announcement. He added that under his leadership, the U.S. could expect a strong Germany at the heart of a united Europe: “We must find a joint European answer to the U.S.’ tariff policy—and to the tariff policy of China.”

Besides reducing taxes and introducing investment incentives through tax write-offs, lower energy prices will be a key tool for bolstering German industry, Merz said. “We will reduce the electricity tax to the European minimum, reduce grid fees, and introduce an industry power price.”

‘Light Outweighs the Shade’

Many environmental analysts welcomed the coalition treaty. Energy policy think tank Agora Energiewende praised the prospective government’s support for a target of reducing emissions by 90% in the EU by 2040 as “a strong signal at a time of geopolitical turmoil that Germany is committed to climate neutrality.” However, proposals contained in the treaty—such as offsetting emissions abroad by buying international credits instead of reducing them at home—risk undermining the target’s credibility and question the EU’s climate policy, Agora said.

The Initiative Climate Neutral Germany agreed that the treaty is good news overall, despite some drawbacks. “From a climate protection perspective, there is light and shade, although we believe the light outweighs the shade,” the group said.

Cover photo:  TeaMeister/Flickr