Transitioning to net zero carbon – Germany’s political and institutional priorities
“Tackling Climate Change” – a Virtual World Tour ahead of COP26: Germany - Part 1.
“Tackling Climate Change” – a Virtual World Tour ahead of COP26: Germany - Part 1.
After kicking off our Virtual World Tour ahead of COP26 with the UK, we’re now travelling to Germany to have a closer look at Europe’s largest economy, starting in this article with an overview of Germany’s political and institutional priorities, covering in more detail:
Known as a pioneer of climate and environmental protection, it didn’t come as a big surprise when Germany, organising and hosting the 2007 G8 summit at Heiligendamm in the Baltic Sea at the beginning of Angela Merkel’s chancellorship, chose climate protection to be the most important topic on the agenda.
Fast-forward to today and it seems that the environmental champion at the heart of Europe has slipped in its efforts to lead the way in combatting the rise of our global temperature: in the 2020 Climate Change Performance Index (produced by a team of mainly German research and climate organisations), the country only ranked 19th. Considering that the tracking tool looks at the climate protection performance of 57 countries, which are responsible for over 90% of GHG emissions since 2005, Germany just about managed to slip into the top third with 56.39 points, a considerably lower score compared to top-ranked Sweden’s 74.42 and the 69.66 points of the runner-up, the UK.
So, since when and why has Germany started to lose its green credibility? How is it addressing its apparent dip in environmental performance in order to achieve net zero carbon by 2050? And is the German government already taking steps to deliver on what 80% of respondents to a recent survey commissioned by the country’s Environment Agency have asked for – for Germany to take a pioneering role in international efforts to protect the climate? We’ll have a look.
One of the most densely populated and industrialised countries in Europe, Germany was a pioneer at introducing legislation on the federal, as well as ‘Laender’ (states), level to deal with severe pollution of water, soil, and air, to prevent unsustainable resource consumption, and to contribute to the protection of the atmosphere and global climatic conditions.
An MP shapes Germany’s determination to protect the environment…
“A planet is plundered” – a book written by German MP Herbert Gruhl – not only became a bestseller when it was published in 1975 but also shaped Germany’s stance on environmental protection for decades to come. In his book, Gruhl – similar to the Club of Rome’s report “The Limits to Growth” three years earlier – warned about the finiteness of global resources and the destructive environmental impact of the economies of Western industrialised countries. While the idea of limited resources sparked a new public debate in the country about how to address this fundamental issue, Germany had already acknowledged that the environment needed protection: in 1969, a new government, a coalition of liberal and labour parties, pledged to introduce measures to prevent damage to human health, vegetation, animals and property. In 1971, it passed an environmental programme that also included the reduction of air pollution, targeting to reduce automobile emissions to 10% of the mean value of 1969 by 1980.
In 1978, one of Germany’s main political parties, the Christian Democratic Union (CDU), added a fourth dimension to its previous economic policy target triangle of “full employment, price stability and steady growth in external balance”, stating in its ‘Ludwigshafen program’ that “the attainment of these goals is not enough on its own to ensure solidarity with future generations. They must therefore be extended to ensure the environmental future of our community” and making clear that “the preservation of natural life support systems is part of our responsible freedom. Who irresponsibly exploits the natural life support system in the present and interferes in the ecological relationships, violates the solidarity between the generations?”
With environmental awareness gaining momentum across the country, the German government declared in 1984 that it wanted the country to become “environmentally friendlier” and take a pioneering role in energy and environmental policy – and it would emphasise its commitment with a fiercely debated key environmental policy in the same year.
…while acid rain, “Waldsterben”, Chernobyl and Fukushima deeply affect the population …
When growing concerns about “Waldsterben” (“dying forests”), linked to acid rain as well as nitric oxide emitted mostly from cars, dominated the public debate and media coverage in the early 1980s, Germany became the first European country to draft a law for further reductions of automobile emissions. This law included the requirement for all petrol car engines to have a catalytic converter and the introduction of unleaded petrol (which was essential for the converters to work properly). While German carmakers protested that the policy heavily disadvantaged their industry against its international competitors and German car owners feared considerably higher costs, the government stuck to the policy, offering tax incentives for those willing to buy new cars with catalysts before 1989 and for owners who were willing to retrofit their vehicles.
With public awareness of environmental issues further increasing, German regulators continued to be very active over the next two decades in shaping environmental policies and in 1994 introduced environmental protection as a state objective into the German Constitution. However, it was Germany’s “Energiewende” (“energy turnaround”) that brought wide public backing and international acclaim. The “Energiewende” became the name for Germany’s transition to a low-carbon, nuclear-free economy, which the German government under Chancellor Angela Merkel outlined in its 2010 energy strategy (which interestingly makes no mention of the word “Energiewende). Key elements of the strategy include the phase-out of nuclear power by 2022 and of coal by 2038 at the latest, while the country’s electricity production should switch to renewables.
The decision to abandon nuclear power was a consequence of the fierce protests culminating in an anti-nuclear movement after the Chernobyl disaster in April 1986, which had shaken the German population to the core, causing the acceptance of nuclear technology to drop dramatically: in 1982, 52% of Germans were for the construction of more nuclear power plants, in April 1984 – in the aftermath of Chernobyl – 83% demanded an immediate stop.
In 2011, the German government went one (drastic) step further: four days after the incident in the Fukushima nuclear power plant on 11 March, with emotions running high across the population, Chancellor Angela Merkel announced a “nuclear halt”. The seven oldest reactors in Germany were temporarily closed (and ultimately wouldn’t return to the grid). On 22 March, the newly created “Ethics Commission for Safe Energy Supplies” started its work and later published a report, which confirmed the importance of phasing-out nuclear power as soon as possible; proposing 2021 as the deadline (one year earlier than agreed in the 2010 energy strategy). Since then, other countries have been closely watching Germany – as an early adopter of an energy transition – for lessons on how to wean a major economy off fossil fuels without sacrificing growth.
Fast forward to 2021, climate change was the German voters’ top concern when they went to the polling stations on 26 September for a federal election that saw Angela Merkel’s reign come to an end after 16 years. And while each of the two big parties, the CDU/CSU and the SPD, are courting the Liberals (FDP) and the Green Party to form a coalition, the voters’ mandate is clear: the new government will have to put climate considerations at the top of their agenda - setting the trajectory for future net zero and other environmental policies and action.
Meanwhile, an historic court ruling (which we cover in more detail later in this article) sends out a stark signal that the legislative powers, too, are closely looking and carefully assessing whether the government’s environmental ambitions are sufficient to ensure the wellbeing of future generations: Germany’s highest court ruled in April this year that key parts of the country’s Climate Change Act from 2019 are insufficient, and the law therefore was partly unconstitutional, demanding immediate improvements.
…and the government seeks international cooperation …
Appreciating that environmental issues don’t observe national borders, Germany, located in the centre of a densely populated region, sought international legal and political cooperation concerning the environment early on, signing multinational UN treaties as well as numerous multilateral and bilateral treaties and agreements. A few examples: Germany belongs to several international commissions on the protection of the transboundary rivers Rhine, Moselle and Saar, Elbe, and Oder; to a Dutch-German and a Polish-German Commission on the Protection of Transboundary Water Bodies. The country is also party to several international agreements for the prevention of ocean pollution and signed a convention on the protection of the Alps in 1991.
… while nudging the EU to take climate action …
Among EU member states, Germany had a reputation as a leader in environmental policy and often nudged – if not pushed – the EU legislator to adopt environmental measures across all EU countries – a move that wasn’t purely based on environmental concerns but also stemmed from the motivation to retain the competitiveness of its economy within the EU.
Today, considered to have the most extensive environmental laws of any international organisation, the Institute for European Environmental Policy estimates that EU environmental law amounts to well over 500 directives, regulations and decisions, directly impacting how its member states address climate and other environmental issues. Climate targets, for example, derived from the EU’s emission reduction plans, with almost 60% of total domestic EU emissions limited under the “Effort Sharing Regulation”, covering emissions from those industries not included in the EU’s Emissions Trading System (ETS): transport, buildings, waste, some smaller industries and agriculture. The Effort Sharing Regulation stipulated that member states must achieve an overall emissions reduction of 30% by 2030, compared to 2005 levels. Countries were, however, required to contribute depending on their relative wealth, meaning that Germany had a much higher responsibility than some other EU countries: the country’s allocated emission reduction target was set at 38% by 2030.
Aiming to transform almost all aspects of the EU economy in order to achieve net carbon neutrality by 2050, the EU announced its €1 trillion European Green Deal in December 2019. The deal meant that Germany and the other 26 member states would be heavily affected because their 2030 GHG emissions reduction targets would have to be raised in order to meet the new Green Deal targets.
… and calling for a green COVID-19 recovery on EU level …
In April 2020, Chancellor Angela Merkel said recovery efforts post the COVID-19 pandemic “will not just be a question of carrying on as we did before the pandemic” and called for the EU’s recovery fund to invest in “climate action”; an aim that has the support of Germany’s business community: over 60 German companies — including household names such as Bayer, ThyssenKrupp and Puma — issued a joint statement calling for any stimulus they receive to be tied to a green transition: “We appeal to the federal government to closely link economic policy measures to overcome both the climate crisis and the coronavirus crisis,” they wrote. Some have offered specific proposals. Salzgitter AG, for example, one of Europe’s biggest steel manufacturers, is lobbying the government to seize this moment to transition steel production from coal-powered to hydrogen-fuelled now.
…while suffering court defeat with its first major climate law
Germany’s first major national climate law, the Climate Protection Act, entered into force on 18 December 2019 as part of an extensive climate package – which we outline in detail in our second Germany article – to reach 2030 climate targets in line with EU goals.
Under the act, Germany is obliged to cut GHG emissions by 55% by 2030, relative to 1990 levels. It also sets-out yearly upper limits for greenhouse gases across various sectors such as energy, transport, buildings and agriculture. If these individual targets are missed, an obligation to make improvements takes effect. Furthermore, it stated that an independent council of experts on climate issues will be set-up to evaluate emissions data, changes in climate action programmes and more – the five members were appointed in August 2020.
However, in what was widely hailed a historic decision, Germany’s highest court ruled in April 2021 that key parts of the climate law are insufficient, and the law therefore was partly unconstitutional. As a result, the Constitutional Court demanded that the government introduce details on GHG reduction targets for the period after 2030 by the end of 2022. The landmark ruling came after ‘Fridays for Future’ and other climate activists, supported by Germanwatch and Greenpeace, had sued the German government in early 2020 over what they said was its insufficient action to tackle climate change.
Presented in May 2021 as the first reform of the law, the government proposed to reduce emissions by 65% by 2030 (from the current goal of 55%, and in line with the EU’s Green Deal targets) and introduced a new goal of an 88% reduction by 2040.
Similar to its mediocre ranking in the 2020 Climate Change Performance Index, Germany only came 12th (out of 41 countries) in the ‘Environmental Policies” dimension of the 2020 Sustainable Governance Indicators (SGI), a tracking tool for effective governance. However, the SGI project team noted improvements: “After a period of complacency, a new set of measures has revitalised Germany’s climate-change policy.”  So, how is Germany currently performing on an environmental level? We share a few observations below:
The COVID-19 pandemic helps Germany achieve its 2020 GHG emissions target …
Due to the pandemic, greenhouse gas emissions in Germany fell significantly, by more than 10% within a year. As a result, 2020 GHG emissions were 42.3% lower than in 1990 and hence beyond the national target of 40% by 2020. However, critics have pointed out that Germany would have missed its target if the lockdowns imposed due to the COVID-19 pandemic hadn’t brought the country to a virtual standstill and that emissions – adjusted for this one-off effect – would have only fallen by 25 million tons, putting the total reduction at 37.8%. With a return to economic activity, they claim that emissions in Germany will rise again in 2021, reversing the positive trend.
… but the ‘Energiewende’ comes at a high price …
While renewable sources reached a new high at 46.2% of Germany’s power consumption in 2020, 3.8 percentage points more than in 2019, with wind energy alone contributing more to the electricity mix than brown coal (lignite) and hard coal combined, lignite remains the country’s second most important energy source. In 2020, it had a share of 16.8% (down 3.3% from 2019) in the electricity mix, while the share of hard coal fell more sharply, by 22%, to 7.3% in 2020. While the latter looks promising, going the last mile in exiting coal power however is estimated to cost the country more than €40 billion. We’ll look in more detail at the country’s coal exit strategy in our second article about Germany.
…and performance in achieving energy efficiency is patchy …
The “Energiewende” is often only associated with the energy transition to renewables: however, another major pillar of the strategy is to improve the energy efficiency of the German economy – considered an essential component to reach climate neutrality by 2050.
Saving energy on a large scale, which requires changing behaviours and introducing new and often expensive technologies in different sectors, relies on everyone’s participation, and this has proven a hard sell so far. While the country aims to reduce primary energy consumption by 20% by 2020 compared to 2008 levels, in 2019, it was only about halfway there, with consumption dropping by 6.7%. While a carbon price – as part of the Climate Protection law – has been imposed this year in the building and transport sectors for the first time, at €25 per ton, market observers consider the price too low to have any great impact.
… meanwhile, further strengthening climate action will be the most pressing task for Germany’s new government …
With opinion polls in the run-up to the German federal election swaying this way and that, and early in the year suggested the country’s Green party could win 20% of the vote - more than double the share it received in the last “Bundestag” election – the main parties, the conservative CDU, the Social Democrats (SDP) and the Liberals (FDP) increasingly fine-tuned their campaign to reflect what polls had brought up to be the major concern for the 60 million Germans eligible to vote: environmental protection and climate action.
The results of the September election saw the SDP narrowly beat the CDU (25.7% versus 24.1%) while the Green Party received 14.8% of the vote, followed by the FDP with 11,5%. Coalition talks are ongoing, but all four parties have proclaimed that climate and energy policies are featuring heavily in the discussion about who will form the new government.
Similar to the UK, a wide range of initiatives are evidence that Germany’s public sector is striving to spearhead the fight against climate change: more than 104 cities, for example, had declared a climate emergency by the end of 2020, with many drafting emergency plans to bring net-zero forward from 2050 to 2035. Below we’ve picked some highlights:
Transport and traffic
While the UK government presented its Industrial Decarbonisation Strategy in March this year, the first major economy to do so, the BDI, the Federation of German Industries, urged the government and the European Commission in April this year to “finally present an ambitious industrial strategy”, emphasising that “a bold industrial strategy is essential to translate the ambitious climate and digital policy goals into growth, sustainable business models and innovation dynamics“.
The overall sentiment of frustration amongst German businesses about a lack of clarity around how to reach the ambitious carbon emission targets by 2050 is equally reflected by the demands from the “Bundesverband mittelstaendischer Wirtschaft’, which represents over 900,000 SMEs: improving and expanding the ETS, introducing incentives for businesses to use more recycled material for their production and rewards for businesses which protect biodiversity are just a few of the association’s requests to ensure environmental protection as well as economic success for its members.
The growing impatience of Germany’s businesses with the government is also linked to the apparent lack of an appropriate policy response from ministers after the BDI published its highly anticipated study “Climate paths for Germany” in 2018, in which it laid out economically cost-efficient strategies for a successful 80% to 95% GHG reduction by 2050 and concluded that “reducing emissions by 80% by 2050 is good for the economy under the right policy framework even if Germany goes it alone,” while a 95% reduction target is only realistic if other industrialised countries make comparable efforts. The BDI calculated that cutting emissions by 80% would require a total investment of €1.5 trillion by 2050, and €2.3 trillion for the 95% target.
While the public debate between industry representatives and the government – as well as between the regional governments and the federal government (last year, four regional states demanded changes to the coal exit law, arguing it would disadvantage hard coal plants versus lignite plants) – is ongoing and becoming increasingly fierce there’s nevertheless significant progress. Highlights include:
In our next Germany-focused article of our Climate Change Virtual World Tour we’ll be looking in further detail at the country’s specific green challenges and opportunities.
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