x Abu Dhabi, UAEMonday 22 January 2018

Climate of stagnation in Germany

Once feted as Europe's greenhouse gas emissions saviour, Angela Merkel, the leader of the continent's biggest economy, now stands charged with negligence over global warming. Things look likely to stay that way for now

A wind farm near Dessau. Reuters
A wind farm near Dessau. Reuters

Angela Merkel was dubbed the "Climate Chancellor" back in 2007 when the German leader threw her weight behind the fight against global warming by making it the central issue of her rotating presidency of the European Union and G8.

At the Heiligendamm G8 summit on Germany's Baltic Coast that year, she even managed to persuade the then US president George W Bush, not known as an enthusiastic environmentalist, to sign up to a common pledge to radically cut carbon emissions. Her subsequent "energy revolution", which aims to wean Germany off fossil fuels by 2050, put her country at the forefront of global efforts to halt climate change.

How times have changed. Mrs Merkel's interest in the climate has waned to such an extent she no longer deserves the title, say critics. It's not just because she has been preoccupied with managing the euro debt crisis. Her energy revolution is proving to be far more costly and complicated than expected, and she does not have sufficient backing in her centre-right coalition ruling party for measures that would help the planet but harm German industry.

"Under Merkel, Germany has gone from being a trailblazer to an obstacle when it comes to climate change policy," says Jürgen Trittin, a leading member of the opposition Green Party.

Martin Kaiser, an analyst at Greenpeace, says she is sending "disastrous signals" that went far beyond Germany and Europe.

"Never has the gap between what the chancellor says and what she does on climate policy been greater than it is today."

Global warming no longer makes headlines in the way it did before Europe sank into its debt turmoil. But its remorseless advance is, many scientists say, evident. Last year the area of ice in the Arctic shrank to a record low.

The oft-cited goal of limiting global warming this century to 2°C is no longer in reach, a Canadian government report concluded in 2011.

Mrs Merkel's rhetoric remains as urgent as ever. "Waiting is not an option," she told an international climate conference hosted by her government in Berlin last week. "If we do nothing, the path will definitely be more complicated." The world, she added, needed to agree by 2015 on binding targets for reductions in carbon dioxide (CO2) emissions.

However, Mrs Merkel herself has stopped actively pushing towards that goal. A Norwegian delegate at the meeting hit the nail on the head when he addressed her directly, saying: "We need German leadership in this point."

Mrs Merkel's failure to forge ahead has global implications. If Germany, as Europe's largest economy, runs out of steam on climate change, so will Europe as a whole. And Europe has hitherto been a global beacon in the fight to cut CO2 emissions. It now stands to lose its moral authority to convince the world's two biggest polluters, the United States and China, to finally get on board.

The EU has pledged to cut its CO2 emissions by 20 per cent by 2020 compared with 1990 levels. It has almost reached that goal, due largely to its economic slowdown. There are calls for it to raise the target to 30 per cent, otherwise the continent will effectively be treading water for the next seven years. Without German leadership, that will not happen.

Mrs Merkel's domestic political concerns are outweighing the need for action on climate policy. She is running for a third term in a general election in September, and she cannot afford to upset her smaller coalition partner, the pro-business Free Democratic Party (FDP), on which she relies for power.

The FDP was opposed to an urgently needed reform of the EU carbon emissions market, the world's first major cap and trade scheme, which aims to provide an economic incentive for companies to curb pollution by forcing them to acquire tradable certificates entitling them to emit CO2.

The price of those certificates has plummeted in recent years, most recently to below €3 per tonne of CO2 due partly to an oversupply caused by the decline in industrial output in the euro crisis. With CO2 permits so cheap, companies currently have little incentive to cut pollution.

Europe has been debating for months how to fix the system and one idea is to remove some of the oversupply of permits in the market and thereby boost the price. But the strictly libertarian FDP said that represented interference in the market. Mrs Merkel, keen to avoid a damaging row, remained silent.

Partly because of her lack of leadership, the European Parliament rejected the reform last month, which plunged the future of the scheme into uncertainty. German electricity generation from coal-fired plants is rising again while the more flexible and environmentally friendly gas-fired ones are being taken offline even though they are needed to offset fluctuating output from wind and solar power. As a result, Germany's CO2 emissions rose last year - by 1.6 per cent - the first increase since unification.

Mrs Merkel now says a reform of the carbon system should go hand in hand with a broad overhaul of German legislation on renewable energy. That, says Regine Günther, a climate expert at the WWF Germany, amounts to a "stinging slap in the face for European climate protection efforts".

"To combine the overdue reforms with what are bound to be very protracted changes in the national renewable energy law is a fatal blow to what was Europe's showcase instrument," says Ms Günther.

Since Mrs Merkel unveiled her energy revolution in 2011, shortly after Japan's Fukushima nuclear accident prompted her to abandon nuclear power as soon as possible, the vast costs of the project have become clearer. To turn her vision of a clean-energy, nuclear-free economy into reality, hundreds of billions of euros will need to be invested in wind farms, solar, biomass and hydroelectric plants, huge switching stations and 4,500 kilometres of new, high-voltage power lines as well as in insulating buildings to make them more energy efficient.

The environment minister Peter Altmaier, a close aide of Mrs Merkel, whom she installed in the job a year ago, said in February the measures may cost up to €1 trillion (Dh4.74tn) in the next few decades and has been lobbying for electricity price caps that would effectively slow down the transition.

Key targets in the green revolution are quietly being abandoned.

Although Germany is on track to meet its goals for renewable power generation, thanks to generous subsidies, Mr Altmaier has questioned whether the country could meet its own targets for a 10 per cent cut in energy consumption and one million electric cars on the roads by 2020. Germany's car makers have been slower than international rivals to roll out electric cars as they remain doubtful about whether there will be an adequate market for the vehicles given their limited range and still relatively high price.

And Mrs Merkel has refused to jump-start the market by offering government grants to subsidise purchases of electric cars - unlike France and Britain, for example.

Red tape, cabinet in-fighting, disputes between central and regional government, and local "not in my back yard" opposition to unsightly power masts and wind turbines have also played their part.

Analysts say Mrs Merkel has slowed the pace because she needs to get Germany's powerful industrial lobby back on side. She angered the power companies by hastily announcing a quick exit from nuclear power, a move that is costing them billions of euros in lost revenues and replacement investment.

In addition, the power price increases resulting from the shift to the more expensive renewable electricity are a burden on industry at a time when rivals in the United States are enjoying a boom fuelled by cheap electricity gained from shale gas obtained by the controversial method of hydraulic fracturing.

"It's time to show leadership," said Ulrich Grillo, the president of the Federation of German Industry. "Every day counts for a successful transition. Politicians must stop playing for time."

That is precisely what Mrs Merkel is doing. Any progress before the September election is highly unlikely. She is widely expected to win.

It remains to be seen whether she will use her third term to regain the title of Climate Chancellor.