Climate Tops Germany’s 2020 Agenda With Merkel Legacy at Stake

(Bloomberg) --

Germany’s long and growing list of outstanding climate goals are among the top priorities on the government’s agenda this year and threaten to tarnish Chancellor Angela Merkel’s legacy if left unfulfilled.

In a New Year speech, Merkel said she knows there are still shortcomings in her coalition’s policies that aim to radically reduce the greenhouse gases emitted by Europe’s biggest economy. The much-criticized climate package, which pledged to exit coal while speeding adoption of electric vehicles, prompted industry concern over competitiveness and criticism from environmentalists who wanted to go even further.

The to-do list facing Germany’s so-called “Climate Chancellor” in 2020 includes correcting stalled onshore-wind market incentives, alleviating rising power prices for consumers and getting Germany’s green power transmission highway back on track. In order to extend last year’s marked drop in carbon dioxide emissions, parliament will have its work cut out from Jan. 13 when it reconvenes in Berlin.

Onshore Wind:

• Germany’s plan to supply 65% of its power through onshore wind by 2030 stumbled last year after new turbine construction got mired in local politics. Proposed financial sweeteners for municipalities looking at new projects are still threatened by zoning rules that limit deployment.
• Merkel’s coalition is under pressure to find a solution or suffer a third consecutive year of stalled growth and accompanying job losses.
• Solar power could be the beneficiary from deadlocked onshore wind lawmakers ramp up rooftop photovoltaic targets, pinning hopes on a technology that rarely triggers local backlash.

Coal Exit:

• Germany’s biggest lignite burners RWE AG and LEAG remain enmeshed in a bitter fight with the government over the time line and compensation for closing plants. Shutdowns are slated to begin in 2020, according to draft legislation.
• Parliamentary passage of the legislation will put Germany on track to close 12.5 gigawatts of coal capacity by 2023 -- equivalent to almost all of Denmark’s installed power.
• Operators of coal and power plants could gain leverage in government negotiations if Merkel’s coalition fails to plug the generation gap caused by onshore wind’s faltering expansion.

Power prices:

• Renewable energy and transmission surcharges have made German retail power prices among Europe’s most expensive. Those high costs are making it harder to electrify transportation and heating.
• Even as benchmark wholesale prices decline, prices for consumers are set to rise an average 6% this year, monitoring agency Verivox said in December.

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net;William Wilkes in Frankfurt at wwilkes1@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Jonathan Tirone

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