Olaf Scholz has led Germany’s Social Democrats (SPD) to an unexpected election victory in 2021. The outgoing government of German chancellor Angela Merkel’s finance minister has led a campaign based on continuity with the Merkel years, more social justice, and a resurgence of renewable energy expansion as a precondition for all other decarbonisation plans. Scholz, on the other hand, will have to tread a fine line between satisfying the standards for putting Germany on the path to climate neutrality but also not alienating voters who backed the SPD because of its commitment not to burden citizens with climate action expenses. The potential next chancellor of a government coalition that includes the Green Party and the pro-business FDP has stated that he wants to be a “climate chancellor” like his predecessor Merkel, but based on his past policy choices, he has a long way to go to achieve that goal.
Many observers were surprised when the Social Democratic Party (SPD), led by chancellor candidate Scholz, emerged as the most powerful party in Germany’s 2021 elections. Scholz, the election victor, has stated his intention to create a coalition government with the Green Party and the pro-business FDP. Finding common ground on Germany’s future climate and energy policies, on the other hand, will almost certainly determine whether or not this effort succeeds. While the SPD’s election platform emphasizes tackling global warming as the “challenge of the century,” the party’s front-runner has yet to establish a track record in energy and climate policy.
After a successful sprint to the finish line just weeks before the election, the SPD defeated the conservative CDU/CSU alliance under candidate Armin Laschet with 26 percent to 24 percent in a narrow election victory that will likely lead to Germany’s first three-party coalition. Scholz’s claim to the chancellery in a combination with the Green Party and the pro-business Free Democrats (FDP) enjoys significantly more support across political camps and among voters than the conservatives’ claim to the chancellery in a partnership with the same two parties. Scholz successfully ran a campaign that promised both continuity with Merkel’s still widely popular style of consensual government and a slight shift in tone with a greater emphasis on questions of social justice and workers’ rights while serving as finance minister and vice chancellor in her last government.
The SPD has had a considerable impact on Germany’s general energy policy during the previous two decades, having been a senior or junior partner in five of the last six administrations since 1998, and having proposed or at least endorsed most of the departing administration’s climate and energy legislation. This includes policies such as Germany’s Climate Action Law, coal phase-out, and Renewable Energy Act reforms (EEG). The SPD and Scholz, on the other hand, have repeatedly emphasized that Merkel’s conservatives frequently thwart more ambitious measures, vowing to undertake rapid reforms that put the country on track to meet its 2045 carbon neutrality objective as soon as a new government is established.
Researchers and observers believe that the government will need to swiftly execute a wide range of policies to support the goal of achieving net-zero greenhouse gas emissions by 2045, many of which will face difficult voter acceptability and social cohesion difficulties. An SPD-led government with the Greens and the FDP would have to reconcile divergent interests ranging from fossil or car sector employees anxious about losing out in the energy transition to small and medium-sized businesses concerned about the short-term costs of fast decarbonisation.
The SPD’s pledge to protect voters from climate expenses might put a stop to rising CO2 prices
Scholz, who previously served as Merkel’s employment minister from 2007 to 2009, ran a campaign centered on low-wage workers, tenants, and a general idea of more “respect” for citizens’ economic and social struggles, in which climate policy was frequently mentioned in the same breath as social justice. Despite Scholz’s declaration that he wants to be a “climate chancellor,” this would most likely restrict the SPD’s demands for financial contributions to emissions reduction from voters. This is especially true because the SPD’s leaders, Norbert Walter-Borjans and Saskia Esken, are regarded left-wingers in the party and defeated Scholz in an internal leadership election in 2019.
The candidate is seen as a more centrist-leaning pragmatic who listens to employers and high finance but is careful of giving the appearance that he ignores the problems of the less fortunate throughout the energy transition. Scholz remarked in July that “there won’t have to be any huge sacrifices” to safeguard the climate, implying that high-wage earners had a greater lever to pull in terms of emissions reduction than others. In an interview with Clean Energy Wire, SPD energy politician Johann Saathoff defended his party’s cautious approach to higher climate costs, saying that people who are already feeling the effects of carbon pricing in transportation and heating, which will be implemented in 2021, will need assistance to adapt.
Scholz is in favor of a Europe-wide expansion of Germany’s national carbon price in transportation and heating, similar to the existing EU emission trading system (ETS) for industry emissions, but he was hesitant to support a national price in the first place and skeptical of drastic price increases once the CO2 price was implemented. “Those who just keep twisting the gasoline price screw show how little they care about residents’ suffering,” Scholz said in June 2021, criticizing the Greens’ intention to raise it.
Scholz’s pledge of quicker renewables growth necessitates modernization of German government, according to an energy lawyer
Should Scholz become the head of a new government, he has declared quicker renewables growth his top climate policy priority in the short term. His main message was to focus on renewable energy development since there would not be enough clean power for all other decarbonisation initiatives, including e-mobility, heating, green hydrogen generation, and infrastructure upgrading, if renewables are not expanded. During his campaign, Scholz stated, “The most urgent job for the incoming administration immediately at the start of the next legislative term would be to boost renewables targets and enable speedier approvals and grid expansions.” The SPD calls for 100 percent renewable power by 2040, solar installations on all eligible rooftops, solar installations in every supermarket, townhall, and school, and a “pact for the future” with states and local governments that sets enforceable renewable objectives.
Scholz has pledged a new law to ensure that industry has enough renewable power to decarbonize in the next decades, in order to make these ambitions a reality. Scholz had chastised the conservative-led energy ministry earlier this year for failing to recognize that Germany would use more more electricity in the future than originally anticipated, and that renewable capacity standards should be modified appropriately. Scholz vowed a “instant fresh start” in climate and energy policy, promising that “as chancellor, I will guarantee we pick up pace in the first year,” and promising to speed up licensing procedures for wind farms and other investments.
The country’s slowing onshore wind power growth is presently viewed as the biggest roadblock to a quicker renewables rollout. The technology now accounts for approximately a quarter of Germany’s yearly electricity usage and is expected to become the most important component of the future power mix. Local opposition to new wind parks, tight laws in many states about where turbines may be erected, and lengthy planning procedures have led wind capacity expansions to practically come to a standstill since 2017. Scholz has stated, “We need to speed up the approval and participation procedures [for wind power plants].” During the election campaign, he stated that approval of a wind turbine should not take “six years,” but rather “six months.”
However, energy lawyer Miriam Vollmer told Clean Energy Wire that Scholz’s primary notion of merely simplifying planning procedures and reducing citizen engagement might be tough to implement. The existing law already has deadlines in place that restrict the approval process to less than seven months. But, she added, the situations where issues emerge owing to species protection or noise pollution take significantly longer since courts order a halt to building. “Stakeholder engagement and environmental organizations’ legal rights to action are required in Germany under EU legislation and cannot be repealed by the federal legislature,” she added. “With the FDP as a party that takes digitalisation seriously and the SPD as a party that is backed strongly by people in public administration, a coalition of the SPD, the Greens, and the FDP should have a realistic chance to modernise the administration,” Vollmer said, adding that “a coalition of the SPD, the Greens, and the FDP should have a realistic chance to modernise the administration.”
Is it possible to get rid of coal sooner? Scholz “wishes to see it happen.”
Scholz offered conflicting signals about whether he would prefer to push up Germany’s ultimate coal phase-out date from the present goal year of 2038, a climate policy subject that dominated the past elections. During an election campaign event in August, the Social Democrat told coal miners in Lusatia’s eastern mining area that the government should stick to its phase-out timeline. “We’ve reached clear agreements that are vital for the businesses, the employees, and the area as a whole.” And these agreements apply and should be followed,” he said, only to backtrack a few days later during a discussion with other contenders for chancellor. “We have frequent reviews that allow a quicker phase-out,” he said, adding that he would want to “make it happen” that coal-fired power generation be phased out sooner. For him, the issue of eliminating coal is inextricably connected to the problem of creating a viable alternative by scaling up renewable energy in Germany and throughout the world. “Hundreds of new coal-fired power facilities are being built throughout the world. “If there is a better option, they will not be implemented,” he asserted.
Carmakers will quit betting on fossil-fuelled automobiles on their own, according to SPD candidate.
Scholz claimed that a ban on combustion engines for new passenger vehicles in Germany is unnecessary since carmakers will cease relying on fossil-fuelled automobiles on their own in the near future, despite the important but divisive issue of emissions reduction in the transportation industry. At the same time, he stated that automakers do not require large amounts of government assistance to make the shift to electric engines. “Car corporations can invest tens of billions on their own – and they are,” he said, adding that smaller suppliers may require government assistance to weather the transition to electric vehicles. The SPD candidate also argued against the Greens’ suggestion that road infrastructure should not be extended any more, claiming that new electric vehicles “require excellent roads” as well. Scholz argued that the “long-term” goal of shifting more passenger and freight traffic away from highways and onto railways would take considerably longer than some had hoped, and that Germany could not afford to ignore road infrastructure.
A global “climate club” and sustainable financing
Scholz has used his role as finance minister since 2018 to oversee the establishment of a national sustainable finance plan, with the objective of better aligning the financial sector with emissions reduction goals and drying up funding for climate-damaging activities. While the approach is still dependent on the completion of an EU-wide sustainable finance taxonomy, and some elements have been criticized, it has been highly praised as a long-overdue filling of a vacuum in climate policy.
Scholz made inroads towards international climate cooperation by proposing a “climate club” that would bring together the most ambitious nations in the field of emissions reduction. His proposal would compel firms in these nations to comply with climate-related regulations while simultaneously attempting to safeguard national economies from the negative effects of international competition. Scholz’s suggestion for economic collaboration emphasized his overall view of how Germany should handle climate action in the next years: “Climate protection is an industrial project for the SPD, not a re-education course.”