German Government In Crisis Over Escalating Cost Of Climate Policy

Christian Democrats accuse German economics minister of breaking coalition agreement over carbon tax on coal plants

“He was one of us, once” – Mass protest by trade unions against Sigmar Gabriel’s plan for a coal tax, Berlin 25 April 2015 photo: picture alliance/dpa

For one and a half years Sigmar Gabriel (Social Democrats, SPD) and Angela Merkel (Christian Democrats, CDU) worked together as a happy political couple. Mutual attacks between the Vice-Chancellor and the Chancellor failed to materialise. When the two sat side by side on the government benches in the Bundestag (Parliament) , they were seen smirking ostentatiously together.

But in recent weeks the harmony has come to an end. And that is not just because the BND affair that is used by Gabriel to put a few scratches onto “Teflon Merkel”: Gabriel feels Merkel has left him alone in his effort to comply with Germany’s climate targets.

By 2020, the federal government wants to reduce carbon dioxide emissions by 40% compared to 1990 levels. To keep that promise, Gabriel intends to levy old coal power plants with a climate levy. He wants to levy penalty payments onto coal plants if they produce CO2 emissions above a certain threshold.

Against this plan, however, intense resistance is growing in Germany: Within the Christian Democrat, within industry and – for especially dangerous for Gabriel – within the trade unions.

Mass protest by trade unions against Sigmar Gabriel’s plan for a coal tax, Berlin 25 April 2015

And although Gabriel is struggling to redeem a promise Merkel made herself, the Chancellor is withholding her backing. The Christian Democrats (CDU) in particular are taking on Gabriel’s climate levy. And Merkel is allowing her party colleagues to assail him.

The newest CDU attack comes from North Rhine-Westphalia. Armin Laschet, the vice chairman of the Federal CDU, is accusing Gabriel of breaking the coalition agreement. The planned additional levy for conventional power plants had “neither been agreed nor ever advised” in the Energy Working Group that negotiated the coalition agreement, he writes in a letter to Gabriel, seen by Die Welt.

Laschet believes that Gabriel’s plan is “economically the wrong approach and therefore cannot be implemented.” The Christian Democrat is especially concerned about the coal miners in his state and large utilities like RWE, based in Essen.

Affected power plants would be threatened by a “wave of decommissioning and structural upheaval in the regions lignite mining area and in eastern Germany would be the result.” The plan threatens “tens of thousands of jobs” in the energy and heavy industries. In addition, European law is making the legality of the plan “more than doubtful,” Laschet writes. “The additional levy would be superfluous if the Ministry of Economics would simply implement what was agreed in the coalition agreement in 2013.”

Photo: Infographics World

The coalition agreement included a clear commitment to a 25 percent expansion target in the share of combined heat and power (CHP) for electricity generation by 2020. Gabriel should focus more on the heat sector and introduce tax incentives for energy-saving building renovations and for modern heating. In addition, the EU’s emissions trading scheme should be improved.

The proposals go in a similar direction as the one submitted to Gabriel last week by the industrial union IG BCE. It also calls for a more generous CHP expansion. In addition, the union is proposing a scrapage scheme for old heaters. […]

Gabriel has already soften his plan: Instead of cutting 22 million tons of CO2, he now wants the climate levy to reduce only 16 million tons. However, he does not intend to abandon his plan. To date, no alternative proposal was in sight which would cause less bring hardships and would be more efficient than the climate levy, the Ministry of Economic let it be known.

Germany’s looming climate disgrace

The federal government is under pressure to take action because Angela Merkel intends to raise the climate issue in early June at the meeting of the seven most industrialised countries (G7) at Schloss Elmau (Bavaria). What is more, a global climate treaty is to be agreed in Paris at the end of the year. If Germany fumbles its climate targets it would be an international embarrassment.

In the run-up to the G7 summit, Green Party leader Anton Hofreiter demands more commitment: “Germany needs to play a leading role internationally to set standards in climate protection.” Hofreiter is proposing a radical step: The Greens want to enshrine limits on carbon dioxide emissions in Germany’s Basic Law (Constitution).

Germany needs “a CO2-Brake “, the party leader tild Die Welt. The Constitution had already enshrined a debt ceiling, and the loss of the basis of existence was “even more dramatic than the accumulation of debt,” said Hofreiter. Therefore, he could imagine, “to adopt climate protection with binding limits on carbon emissions in a similar way”. With the inclusion of a debt ceiling this had already been done. Other countries in the EU have followed suit and also set limits on borrowing.

With its demand for a constitutional CO2 ceiling Hofreiter drives the confrontation with the federal government to a new level of escalation. Since 2009, Chancellor Merkel and her colleagues have always emphasised that the debt ceiling enshrined in the Basic Law is a historical project of great prestige for to relieve of future generations. Now the Greens are trying to enforce a similar project on climate change with the same reasoning.

Full story (in German)