Germany signs off on multi-billion climate reform package

The German parliament on Friday formally approved a wide-ranging package of climate policy reforms, in a relief to Chancellor Angela Merkel's government as it faces growing pressure to take environmental action.

Germany signs off on multi-billion climate reform package
A climate strike in Kiel on November 29th. Photo: DPA

The so-called climate package, which includes plans to reduce rail prices and increase taxes on air travel, will take effect on January 1st after months of wrangling.

Previously blocked by a dispute over costing, the bill was passed by the upper house after MPs reached a compromise on a higher carbon price earlier this week.

 “We have achieved a national consensus on climate that will give us fresh momentum to reach our climate goals,” said Economy Minister and close Merkel ally Peter Altmaier.

The package is intended to help Europe's largest economy reduce greenhouse gas emissions by 55 percent by 2030 compared to 1990 levels.

That promises to be a huge challenge in a country that despite its green reputation abroad remains heavily dependent on polluting coal power and has a fondness for gas-guzzling cars.

The climate package has already attracted criticism from environmentalists and business lobbies, but the government was keen to show it was taking global warming seriously after months of massive “Friday for Future” protests.

The bill's approval also comes hot on the heels of European Commission chief Ursula Von Der Leyen's ambitious “Green Deal” unveiled earlier this month, aimed at making the bloc carbon neutral by 2050.

READ ALSO: Higher fuel costs and Autobahn speed limits: How can Germany go green?

'CO2 price'
Germany's climate package is estimated to cost the government €54 billion euros by 2023.
The slew of measures will see long-distance rail tickets become around 10 percent cheaper, while flying will become more expensive.
Following the compromise struck between the government and lawmakers, Germany will charge a starting price of 25 euros per tonne of carbon dioxide emissions in transport and construction from 2021.
The government had initially proposed a rate of just 10 euros per tonne – to the outrage of environmental campaigners, the opposition Greens and even members of Merkel's own coalition partner the Social Democrats.
The rate is set to increase to 55 euros per tonne by 2025, before eventually being incorporated into an EU-wide carbon trading system.
To offset the higher costs for consumers and companies, the climate package envisages subsidies for electric cars and tax incentives for greener heating, electricity and housing.
Merkel on Monday welcomed the carbon price compromise as a “positive contrast” to the lack of progress achieved at last week's inconclusive COP25 global climate conference in Madrid.
“The different parties… showed a willingness to tend towards a solution without letting things go on forever,” she said.
'Too late'
But academics from “Scientists for Future” said the CO2 price was “too weak” to convince households and companies to change their behaviour.
“It's too little, too late,” the campaigners said in a withering verdict of the climate package.
Winfried Kretschmann, a leading figure in the Green party and state premier of Baden-Wuerttemberg, struck a more upbeat note.
“It's a step in the right direction” but “many issues remain unresolved”, he said.
One of the most hotly-contested topics is Germany's planned coal exit by 2038, a controversial decision that has pitted environmentalists against those wanting to protect jobs in the sector.
The dirty fossil fuel still accounts for around a third of Germany's energy mix, in part because of Merkel's 2011 decision to phase out nuclear power.

Holger Lösch, deputy director of the Federation of German Industry (BDI)  said Germany faced higher gas and electricity prices as a result of the climate package that would undermine the country's businesses.

By Kit Holden

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Can German Chancellor Scholz create a Merkel-like buzz at the G7 in Bavaria?

The last time Germany hosted a G7 summit, then-chancellor Angela Merkel produced a series of viral images with Barack Obama, clinking giant mugs in a traditional Bavarian beer garden and communing against a verdant Alpine backdrop.

Can German Chancellor Scholz create a Merkel-like buzz at the G7 in Bavaria?

Her successor Olaf Scholz, hobbled in domestic opinion polls and of modest global stature, may struggle to match that convivial atmosphere when leaders gather again from Sunday.

The centrist Scholz, 64, assumed the presidency of the Group of Seven rich countries in January, just a month after taking office in Berlin.

Since then his handling of the Russian invasion of Ukraine, soaring inflation and energy supply complications have put his government to the test while sending his approval ratings plunging.

READ ALSO: Opinion – Scholz is already out of step at Germany – it’s time for a change of course

Scholz told parliament on Wednesday he was ready to seize the three days of talks at the Elmau Castle mountain resort – the same remote, picturesque venue Merkel chose in 2015 – to burnish Germany’s global image and the standing of the West.

“In Europe’s biggest security crisis for decades, Germany as the economically strongest and most populous country in the EU is assuming special responsibility – and not just for its own security but also for the security of its allies,” he said.

A series of summits in the coming days must show “that G7, EU and NATO are as united as ever” and that the “democracies of the world are standing together in the fight against (Russian President Vladimir) Putin’s imperialism,” Scholz said.

READ ALSO: Germany tightens border controls ahead of G7 summit

German Chancellor Olaf Scholz arrives at the EU summit in Brussels on June 23rd.

German Chancellor Olaf Scholz arrives at the EU summit in Brussels on June 23rd 2022. Photo: picture alliance/dpa/AP | Olivier Matthys

‘Merkel tradition’

Joachim Trebbe, a professor of political communication at Berlin’s Free University, said Scholz had a “huge opportunity” with the G7 to dispel any doubts about his leadership skills or resolve against the Russian president.

“At the start of his term and even when the war began, Scholz was quite reserved – perhaps a little bit in the tradition of Ms Merkel,” a
still-popular conservative the Social Democratic chancellor has sought to emulate, Trebbe said.

She also “tended to manage crises and didn’t pay much attention to informing the media at every step”.

Former US President Barack Obama and ex-German Chancellor Angela Merkel sit during a concert visit in Elmau (Bavaria) in June 2015 as part of the G7 summit.

Former US President Barack Obama and ex-German Chancellor Angela Merkel at a concert visit in Elmau (Bavaria) in June 2015 during the G7 summit. Photo: picture alliance / dpa | Karl-Josef Hildenbrand

After accusations of foot-dragging, Scholz’s attempts at a reset were on display during a long-delayed visit to Kyiv last week, joined by the leaders of France, Italy and Romania.

A journalist from the daily Süddeutsche Zeitung travelling with the chancellor noted that he had a tendency to make gaffes under pressure – like “an old tap that either releases ice-cold or boiling water”.


His trouble finding the middle ground had led him to exercise too much caution when it came to sending weapons to Ukraine, or too little, as when on a visit to Lithuania this month he significantly overstated German arms deliveries.   

The chancellor, whose sometimes robotic style has earned him the nickname Scholzomat, has also found himself outflanked in his own unwieldy ruling coalition of his Social Democrats (SPD), ecologist Greens and liberal Free Democrats.

A poll this week showed that the Greens – with popular Foreign Minister Annalena Baerbock and Economy Minister Robert Habeck, both credited with clearer messaging on Ukraine — were leading the SPD in voter intentions for the first time since July 2021.

Both parties, however, are currently trailing the conservative opposition, which has relentlessly criticised Scholz’s Ukraine and energy policies as too timid.

READ ALSO: Why has Germany been so slow to deliver weapons to Ukraine?

Trebbe said that initiatives at the G7 bearing Scholz’s imprint on issues including future political and economic support for Ukraine, climate
protection and strengthening democracies worldwide were crucial if he hoped to gain political tailwinds from the summit.

But he said the gathering was nearly as much about generating images, such as the instant meme of Merkel, arms outstretched, explaining her world view to a nonchalant Obama, draped in repose on a wooden bench.

“That’s where symbols of unity, common strategy and strong leadership are created,” Trebbe said.

“I’m pretty sure Scholz has a team of professionals ready to take full advantage of that aspect of the summit.”

By Deborah COLE