Social justice trumps climate ahead of German elections

Climate concerns have been pushed from the top of German voters' personal considerations in an electoral race that has been increasingly dominated by social justice, while concerns mount about the cost of the energy transition.

Polls suggest Germany's future government is most likely to be led by outgoing finance minister Olaf Scholz of the Social Democratic Party (SPD), following the federal elections on 26 September.

The SPD's preferred coalition partner is the opposition Green Party, Scholz said, although this party would be unable to govern on its own, based on polling trends.

The SPD, which has put social justice issues at the top of its agenda, has seen its choice vindicated, given its spectacular, if unexpected, comeback over the past few months.

The Greens, which for much of this year polled ahead of the SPD and almost at parity with outgoing chancellor Angela Merkel's centre-right Christian Democratic Union/Christian Social Union (CDU/CSU) group, have slipped to third place. But they are likely to be part of most potential coalitions drawn up from the five-party pool.

The pro-business liberal Free Democratic Party (FDP) ranks fourth in the polls, while the left-wing Linke party has stagnated at 6pc, just above the 5pc threshold needed for a party to enter the Bundestag. The populist right-wing Alternative for Germany (AfD) will not form part of any federal government.

Priority shift

Social justice issues rank top of voters' personal concerns, having pushed climate change to second position, according to recent surveys.

While flooding in western Germany earlier this summer has added to a general awareness of the urgent need for climate action, the costs of the energy transition are also increasingly viewed as a problem in a country in which more than half of the population live in rented accommodation.

Perhaps reflecting this priority shift, the bureau of green energy policy spokeswoman Julia Verlinden said that if the Greens enter potential coalition negotiations, "it will be a question, besides important issues such as the minimum wage and a guaranteed basic child allowance, of obtaining as much as possible for climate protection".

High wholesale energy prices have not quite filtered through to consumers yet, except for pump prices and announcements by several gas retailers that there will be double-digit price increases in the autumn. Federal transport minister Andreas Scheuer of the CSU party has warned that if the €2/litre threshold is breached at the pump, policymakers may have to intervene.

Differences between the five parties over energy policy are less fundamental than they were during the last federal elections four years ago. The CDU/CSU party has had to adapt its long-time renewables-critical attitude, as industrial firms — generally the party's core clientele — started looking to the Greens in their quest for green power.

The CDU/CSU earlier this year lost some of its most influential anti-renewables hardliners in parliament, which made it easier for the party to support the outgoing government's ambitious new climate protection law.

Slow renewables growth

The slow expansion of renewables — particularly onshore wind — is the dominant issue for Germany's energy sector, a problem enshrined in the manifestos and statements of all five parties.

Party leaders have repeatedly pledged that once in power, they will streamline and accelerate planning procedures and tackle nature conservation issues, regional planning laws and air traffic-related restrictions.

But support at the federal level for renewables growth may not necessarily translate into rapid changes on the ground, as regional plans are the responsibility of individual states and local context plays a crucial role. Germany several times has had to tweak its renewables support to make it comply with EU state aid rules. Parts of the amended renewable energies law (EEG) that took force this year still do not have EU approval.

Existing legislation calls for a 65pc share in renewable power by 2030. The SPD wants 100pc of Germany's power consumption to be covered by renewables by 2040. The CDU/CSU has given no concrete target, but pledges accelerated growth. The Greens aim for 100pc renewables by 2035. The FDP rejects mandated growth targets, instead calling for demand-driven growth. Linke, which demands the nationalisation of the power sector — among other industries — calls for a shift to a 100pc renewables system "as soon as possible".

Earlier coal phase-out

An earlier coal phase-out — by 2030 against the mandated deadline of 2038 — by now is regarded as nearly inevitable, given high EU emissions trading system (ETS) prices and the fact that Germany's climate protection plans allow the energy sector a carbon allowance of just 108mn t of CO2 in 2030.

The Greens and Linke have proposed a mandated coal phase-out by 2030.

The leaders of the SPD and CDU/CSU have publicly stated that they expect the country's coal-fired fleet to be phased out by 2030. But they do not propose to legislate on an earlier phase-out; the CDU/CSU, like the FDP, said this should be left to the EU ETS.

SPD parliamentary deputy chairman for energy and the environment Matthias Miersch recently pledged that before agreeing on any accelerated coal phase-out plan, the SPD will ensure that "no-one is left behind", referencing the party's commitment to voters.

The parties' manifestos were written before energy wholesale market prices started soaring. Regarding price concerns, the manifestos focus on the EEG levy on power consumption and the domestic carbon price in the transport and heating sector, introduced at the start of this year.

All parties have pledged to somehow reduce or phase out the EEG levy in the next few years to ensure electricity becomes cheaper and as part of a general revamp of taxes and tariffs in the power system. The EEG levy, however, is likely to fall substantially next year — from its cap of €65/MWh this year — given the strong rise in wholesale power prices.

Domestic EU ETS

Regarding the domestic carbon price, which started at €25/CO2e but will be raised annually, the SPD, Greens and Linke all have pledged that lower-income households will not suffer, while the FDP has called for a rapid integration of the domestic scheme in an EU system.

In a survey of economists organised by economic research institute Ifo, more than half of respondents said a coalition government formed by the CDU/CSU and FDP would lead to a scenario with the highest CO2 emissions in Germany by the end of the four-year parliamentary term. It is also the coalition most expected — by 44pc of the economists — to produce the strongest economic growth.

Opinions are "remarkably" split on the coalition make-up most likely to preside over the lowest-emissions scenario in the next four years, Ifo said. About 18pc believe an SPD/Greens government will see the lowest emissions, with other coalitions following close behind. "It seems that economists are unsure about whether it is low economic growth — or rather, Green policies — that will have the highest effect on denting CO2 emissions," Ifo economist Niklas Potrafke said.

By Chloe Jardine