German government buckles under fossil fuel industry pressure

Sigmar Gabriel: Source

Sigmar Gabriel: Source

Today, news not related to the Greek referendum made it into the German headlines. News with outrageous content: The German government decided that profits of Germany’s dirtiest coal companies are more important than the people and more important than climate change risks. Chancellor Merkel and Minister for Economics and Energy, Sigmar Gabriel agreed to drop the plan for a coal levy that had been discussed for months. Instead, they agreed to compensate (!) coal companies like RWE for lignite power plants that will go off-grid. More precisely, potential loss of profits from old coal-fired plants with a capacity of up to 2.7 Gigawatts that will have to go offline will be compensated with tax payers money.

Energy Minister Sigmar Gabriel explicitly agreed to this, accommodating the interests of the coal lobby, consisting of trade unions, industry, lignite- reliant States and parts of the governing parties CDU (Christian Democratic Union) and SPD (Social Democratic Party).

As Bloomberg reports, RWE AG, the utility whose coal-fired plants make it Europe’s largest carbon emitter, surged after this decision. RWE jumped as much as 4.8 percent, the most since June 24, and traded up 4.2 percent at 20.155 euros at 10:25 a.m. in Frankfurt, making it the biggest gainer in Germany’s benchmark DAX index, followed by competitor EON SE, up 1.7 percent. This speaks for itself.

The decision of the German government is therefore not only contradictory to Angela Merkel´s commitment at the G7 Summit in Elmau and harms Germans leadership in the international energy transition. Even worse is that this is against people`s interest: more than 300.000 citizens signed a petition, calling their government to phase out of coal. The government has not served the long-term interest of many but rather the short-term interest of a few.

While the coal lobby argues that the levy could have put up to 100,000 jobs at risk and lead to the decline of the mining and power generation industries, independent analyses have confirmed that the proposal for the climate levy is economically sound and would fully deliver on the power sector’s emissions reduction targets. However, Sigmar Gabriel has not even tried to generate support and build consensus around it. In fact, many reservations are largely stemming from the top-down, undiplomatic and non-inclusive manner with which the proposal was prepared and introduced. Before any of the key stakeholders were even consulted the draft was leaked widely, possibly with the intention to spark a debate.

This shows that political power dominates the process, while the necessary debate on how to manage the unavoidable transition out of coal in a just and socially acceptable manner is not happening. Any comprehensive plan for an affordable and just transition to a 100% renewables based energy sector and a decarbonization of the economy is still missing.



Anna Leidreiter, Senior Programme Manager Climate and Energy

Anna Leidreiter mittelAnna Leidreiter joined the World Future Council in October 2010. As Senior Programme Manager for Climate Energy, she carries out policy research and develops advocacy campaigns with the climate energy team. Follow Anna on Twitter: @AnnaLeidreiter



Stefan Schurig, Director Climate Energy

Stefan Schurig As Director Climate Energy at the World Future Council Stefan Schurig initiated the international policy campaign on renewable energy and the worldwide promotion of ‘Feed-In tariffs’ as one of the best policies for a massive uptake of renewable energy.

Thursday, July 2nd, 2015