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DW
24-05-2025
- Business
- DW
Is Germany's new government weakening climate protection? – DW – 05/24/2025
When Katherina Reiche of the center-right Christian Democratic Union (CDU), took over from her predecessor, Robert Habeck of the Green Party, as the new Federal Minister for Economic Affairs and Energy, she had warm words for him. That was surprising. During Germany's recent federal election campaign, Habeck had been flooded with criticism from conservative politicians. The head of the conservative Christian Social Union (CSU), Markus Söder, for example, repeatedly complained about the "worst economics minister of all time." Reiche's view differed. She recalled how Habeck had managed the post-pandemic energy crisis, after Russia began its war of aggression against Ukraine, in the spring of 2022: "I would like to thank you for that almost superhuman achievement," Reiche said. Habeck contributed to "this country getting through this crisis," even with his unpopular policy decisions. The Ministry of Economic Affairs staff responded with prolonged applause, and Habeck was visibly moved. German industry calls for more proactive growth policy To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Abolishing 'Habeck's' law on heating In the meantime, Reiche is working towards amending Habeck's most important law: the "Building Energy Act" (popularly known in Germany as the Heating Law), she wants to dismantle its substance almost entirely. That goal is indeed clearly stated in the new coalition agreement between the CDU, CSU, and the center-left Social Democratic Party (SPD): "We will abolish the Building Energy Act." Habeck, who was also responsible for climate protection, attempted to tackle one of the key weaknesses in German climate policy during his time in government from 2021 to the beginning of May 2025: While the expansion of renewable energies such as solar and wind is progressing, Germans still predominantly heat their homes with climate-damaging natural gas. The Building Energy Act was intended to promote the installation of new, environmentally friendly heat pumps in homes and set end dates for operating old gas heating systems. However, the law caused a great deal of resentment, and critics accused the Greens of interfering in Germans' boiler rooms. Reiche now wants to change the law. On the podcast, Table Today, she said that the law in its current form more or less prescribes just one technology: the heat pump. "There is a de facto operating ban on gas boilers installed before 1991," said the CDU politician. "First of all, we need to abolish this operating ban in order to restore calm to the market." Climate change takes back seat in Germany's 2025 election To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video After initial problems, the installation of heat pumps has recently picked up significantly. In the first three months of this year, sales in Germany rose by 35% year-on-year to 62,000 units. The German Heat Pump Association announced in a press release. The managing director of the organization, Martin Sabel, spoke of "light at the end of the tunnel." The state subsidy of up to 70% of the costs is now "established," the association expects sales of 260,000 heat pumps for the year. Habeck's dream of 500,000 heat pumps per year That demonstrates how bold Habeck's original ideas were. In 2022, he stated that his target was the installation of around 500,000 new heat pumps each year. "The market is gradually gaining momentum because people are realizing that it makes sense to move away from fossil fuels," Sabel said in an interview with Der Spiegel. Reiche also announced that securing the energy supply is now a priority for the government in addition to climate protection. That will include constructing new gas-fired power plants with a total capacity of around 20 gigawatts. Gas is more environmentally friendly than coal, which Germany wants to phase out by 2038 and still supplies around 20% of German electricity. For that reason, the previous government had also supported the construction of gas-fired power plants — albeit not to the extent mentioned by Reiche. Germany's heat pump makers look to expand at home and abroad To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Reiche's plans 'completely oversized' Reiche's gas plans drew the attention of energy expert Claudia Kemfert from the German Institute for Economic Research (DIW). In the Bavarian Media Group's newspapers, Kemfert said the plans are "completely oversized," adding that "Hydropower, making the energy system more flexible and the use of increasingly cost-effective large-scale batteries would also be viable alternatives." According to Martin Kaiser, climate expert for the environmental group Greenpeace, Germany should finally break the fossil fuel chains that tie the country to expensive fossil fuel imports. "Instead of making Germany more independent by accelerating the expansion of renewables, Katherina Reiche wants to steer us into new fossil dependencies," Kaiser said. So, does climate protection no longer play a significant role in the new government? Even if critics suspect this, Germany took a decisive step for climate protection in the coming years even before Friedrich Merz was elected Chancellor: The new government decided on a gigantic investment program for infrastructure of €500 billion ($565 billion). However, Germany's Basic Law had to be amended for this, which is why the CDU, CSU and SPD also needed the votes of the Greens. And they succeeded in ensuring that €100 billion of the €500 billion would be spent on climate protection. Some observers spoke of the Greens' greatest success at the end of their time in government. High expectations of the new environment minister Less at the center of the debate is the new Environment Minister Carsten Schneider, who is now also responsible for international climate protection in the new government. Martin Kaiser has clear expectations of the SPD politician. "He rightly sees German climate foreign policy as an essential part of security policy. Schneider wants to, and must save global climate protection in foreign policy — despite Trump." Minister Schneider must now draw up a climate protection program by the end of the year, which will oblige his colleagues in the cabinet to take immediate action." However, it remains to be seen whether Schneider will get the chance to do that within the cabinet against the strong force of Economics Minister Reiche. This article was originally written in German. While you're here: Every Tuesday, DW editors round up what is happening in German politics and society. You can sign up here for the weekly email newsletter, Berlin Briefing.
Euronews
05-05-2025
- Business
- Euronews
Germany's CDU/CSU and SPD leaders sign coalition agreement for new government
ADVERTISEMENT Germany's conservative CDU/CSU political union and the centre-left Social Democrats (SPD) have signed off on a coalition deal in Berlin which paves the way for a new government to be sworn in on Tuesday. CDU party leader Friedrich Merz, set to be sworn in as Germany's new chancellor, pledged that the three parties would "vigorously get to work." "We know that it is our almost historical obligation to lead this coalition to success. We are determined to do this together," he said ahead of the signing. Responsibility for Germany The motto of the 144-page coalition agreement is "Responsibility for Germany." "Germany can successfully master every task on its own and in close co-operation with our partners and friends in the world," the document says. The agreement renews "the promise of the social market economy - opportunities and prosperity for all" and says the new government will strengthen Germany's defence capabilities to safeguard freedom and peace. CDU leader Friedrich Merz signs the coalition treaty in Berlin, 5 May, 2025 AP Photo The intelligence services and the police are to be given extended powers and in the case of certain criminal offences, security services will be allowed to use artificial intelligence to analyse publicly accessible data. The coalition parties have also announced a "new, more consistent approach to migration policy." The plan is to suspend voluntary admission programmes and family reunification. In addition, asylum seekers are to be turned away at the border "in coordination with European partners." A new law is planned for the federal police which will make it possible to apply for detention pending deportation for foreigners who are obliged to leave the country. The partial legalisation of cannabis initiated by the previous government is to be "openly reviewed" in the autumn. Tax relief In the preamble to the agreement, parties reaffirm their commitment to the social market economy with the aim of creating "opportunities and prosperity for all." Measures are planned to reduce energy costs, speeding up authorisation processes and easing some of the burdens on company founders. In the middle of the legislative period, the coalition is planning to ease the burden on small and medium incomes by reducing income tax. In addition, tax incentives are to be created for longer working hours. A reintroduction of the reduced VAT rate of 7% for the catering sector is planned from 2026. ADVERTISEMENT The Steinbach-Volkskunst nutcracker factory in Marienberg, 15 April, 2025 AP Photo The document says the coalition is committed to the Paris Climate Agreement and the goal of making Germany climate neutral by 2045. The coalition is also planning to abolish the so-called Heating Act, which was introduced under the previous government, and replace it with a new Building Energy Act. This is to be more open to technology, more flexible and more user-friendly, with a focus on effectively reducing CO2 emissions. The expansion of wind and solar power initiated under the previous government will be continued. ADVERTISEMENT Cabinet picks Johan Wadephul of the CDU will replace Annalena Baerbock as Germany's Foreign Minister with Boris Pistoris remaining in office as defence minister. The SPD's Lars Klingbeil will take on the dual roles of vice chancellor and finance minister. Aleander Dobrindt from the CSU will head the interior ministry with the SPD's Stefanie Hubig named as justice minister. CSU leader Markus Söder called the coalition a "community of responsibility" and pledged it would be "a strong team." ADVERTISEMENT
Arab Times
17-02-2025
- Business
- Arab Times
Fixing Germany's economy critical task for country's next government
MULFINGEN, Germany, Feb 17, (AP): Germany needs a new business model. The old one, fueled by cheap natural gas from Russia and lucrative exports to China, is broken, leaving Europe's biggest economy mired in stagnation and angst about the future. Delivering that fresh growth strategy is going to be the biggest challenge for the government that takes office after a national election set for Feb 23, seven months ahead of schedule. The nation that became known for the quality of its products has not seen real economic growth for five years. Multiple factors conspired to take Germany from industrial powerhouse to post-pandemic straggler: too much bureaucracy, a shortage of skilled workers, slow deployment of technology and a lack of clear direction from the outgoing coalition government are among them. Rising competition from China and high energy prices due to Russia's war in Ukraine were additional hits. "We really need a more company- and enterprise-friendly politics," said Klaus Geissdoerfer, CEO of industrial fan manufacturer EBM-Papst. "We have bright talent in Germany. We have good companies, but at the moment we don't have the awareness on the political level.' With 2.5 billion euros ($2.6 billion) in annual revenue and plants on three continents, EBM-Papst describes itself as the global leader in its field. The company reported last year that it was "suffering in Germany in particular' and experienced a 4.1% revenue decline in its home market. Geissdoerfer said EBM-Papst's heating technology division lost 18.7% of its sales through a clumsily handled push to get property owners to replace gas furnaces with less polluting electric heat pumps. The requirements of the Building Energy Act put forward by Chancellor Olaf Scholz' three-party coalition were so confusing, people put off the upgrades to their heating systems or rushed to buy new gas devices before the law took effect, he said. That sapped demand for the ultra-quiet heat pump fans EBM-Papst makes. Consumers wondered, "What is the right technology for my house?' Geissdoerfer said. "And so everybody said, 'If I don't have to, I better wait.'' Geissdoerfer made a complaint heard across industry: Germany's bureaucracy is excessive. A 2023 law that requires public and private entities to combat climate change by reducing their energy use means EBM-Papst must assign employees to detail what the company is doing to comply, he said. "So now, instead of implementing measures, they write and report,' the CEO said, adding that the documentation work is a poor use of time at a company whose core business is energy-saving equipment. "I really hope with the new government we can get this solved, because at the moment it's too much.'
Yahoo
17-02-2025
- Business
- Yahoo
Fixing Germany's economy is a critical task for the country's next government
MULFINGEN, Germany (AP) — Germany needs a new business model. The old one, fueled by cheap natural gas from Russia and lucrative exports to China, is broken, leaving Europe's biggest economy mired in stagnation and angst about the future. Delivering that fresh growth strategy is going to be the biggest challenge for the government that takes office after a national election set for Feb. 23, seven months ahead of schedule. The nation that became known for the quality of its products has not seen real economic growth for five years. Multiple factors conspired to take Germany from industrial powerhouse to post-pandemic straggler: too much bureaucracy, a shortage of skilled workers, slow deployment of technology and a lack of clear direction from the outgoing coalition government are among them. Rising competition from China and high energy prices due to Russia's war in Ukraine were additional hits. 'We really need a more company- and enterprise-friendly politics," said Klaus Geissdoerfer, CEO of industrial fan manufacturer EBM-Papst. 'We have bright talent in Germany. We have good companies, but at the moment we don't have the awareness on the political level.' Business criticism gets louder as election nears With 2.5 billion euros ($2.6 billion) in annual revenue and plants on three continents, EBM-Papst describes itself as the global leader in its field. The company reported last year that it was 'suffering in Germany in particular' and experienced a 4.1% revenue decline in its home market. Geissdoerfer said EBM-Papst's heating technology division lost 18.7% of its sales through a clumsily handled push to get property owners to replace gas furnaces with less polluting electric heat pumps. The requirements of the Building Energy Act put forward by Chancellor Olaf Scholz' three-party coalition were so confusing, people put off the upgrades to their heating systems or rushed to buy new gas devices before the law took effect, he said. That sapped demand for the ultra-quiet heat pump fans EBM-Papst makes. Consumers wondered, 'What is the right technology for my house?' Geissdoerfer said. 'And so everybody said, 'If I don't have to, I better wait.'' Geissdoerfer made a complaint heard across industry: Germany's bureaucracy is excessive. A 2023 law that requires public and private entities to combat climate change by reducing their energy use means EBM-Papst must assign employees to detail what the company is doing to comply, he said. 'So now, instead of implementing measures, they write and report,' the CEO said, adding that the documentation work is a poor use of time at a company whose core business is energy-saving equipment. 'I really hope with the new government we can get this solved, because at the moment it's too much.' EBM-Papst is moving in the direction where economists say Germany as a whole should put its industrial resources: into green and digital technology. The company, headquartered in Mulfingen, a town of 3,700 residents in rural southwest Germany, is equipping energy-hungry artificial intelligence data centers with efficient cooling systems for their servers. It also is working on incorporating AI features to help tech companies optimize their power use and to predict when equipment needs to be replaced. In the meantime, EBM-Papst is coping with Germany's economic malaise by shifting its investment focus to Asia and the United States. The company now supplies U.S. customers, for instance, from plants in Farmington, Connecticut,and Telford, Tennessee. Its moves to localize production abroad predate the coronavirus pandemic but give EBM-Papst a shield against any new import taxes imposed by U.S. President Donald Trump. Ties to China and Russia put Germany in a bind On top of the homegrown issues, international relations have dealt another blow. Russia cut off most of the country's natural gas supplies over the German government's wartime support for Ukraine. Electricity prices, a key cost for industry, have risen to 2 1/2 times higher than in the U.S. and China. Metalworking firm Mecanindus-Vogelsang Group, which makes precision parts for automakers and other manufacturers, says it pays twice as much per kilowatt hour for the electricity its German plants use as it does for its U.S. sites in Mt. Sterling, Kentucky, and Lakewood, New Jersey. That's 100,000 euros in added costs and 'a gigantic competitive disadvantage" CEO Ulrich Flatken said. 'To avoid deindustrialization, which is already taking place, we urgently need internationally competitive energy prices,' Flatken said. Another shock came from China, which throughout the 2010s served as a lucrative market for German-made machinery and automobiles. Once Chinese companies started making those same products, backed by government subsidies, German exports suffered. Germany's economy contracted in each of the last two years. By the end of 2024, it was only 0.3% bigger than it was in 2019, before the pandemic. The U.S. economy grew by 11.4% during over the same period, while China's expanded by 25.8%, according to Germany's Federal Statistical Office. Complacency and depression Marcel Fratzscher, president of the German Institute for Economic Research, thinks complacency set in during the boom years of exports to China. German companies weren't quick enough to respond to technological trends, such as the move to electric cars, he said. 'They enjoyed the success of the 2010s and they have been too slow in understanding that they need to change and adapt,' Fratzscher said. As the economic woes drag on, 'mental depression' has set in, he said. 'The pessimism is enormous among companies and citizens, and that's an important explanation why companies are not investing.' Many business executives and economists argue that Germany's next government should work to loosen constitutional limits on debt so it can increase public spending on infrastructure and education. Fratzscher wonders if political leaders, like the economy, will falter in adopting new ways of doing things. 'For the past 75 years, Germany has been built very much on consensus, stability oriented, lots of checks and balances in the political system, and that makes rapid change very difficult,' he said. 'We need to change the mindset, to understand we need to be much faster on economic transformations.' Sign in to access your portfolio
The Hill
17-02-2025
- Business
- The Hill
Fixing Germany's economy is a critical task for the country's next government
MULFINGEN, Germany (AP) — Germany needs a new business model. The old one, fueled by cheap natural gas from Russia and lucrative exports to China, is broken, leaving Europe's biggest economy mired in stagnation and angst about the future. Delivering that fresh growth strategy is going to be the biggest challenge for the government that takes office after a national election set for Feb. 23, seven months ahead of schedule. The nation that became known for the quality of its products has not seen real economic growth for five years. Multiple factors conspired to take Germany from industrial powerhouse to post-pandemic straggler: too much bureaucracy, a shortage of skilled workers, slow deployment of technology and a lack of clear direction from the outgoing coalition government are among them. Rising competition from China and high energy prices due to Russia's war in Ukraine were additional hits. 'We really need a more company- and enterprise-friendly politics,' Klaus Geissdoerfer, CEO of industrial fan manufacturer EBM-Papst, said. 'We have bright talent in Germany. We have good companies, but at the moment we don't have the awareness on the political level.' Business criticism gets louder as election nears With 2.5 billion euros ($2.6 billion) in annual revenue and plants on three continents, EBM-Papst describes itself as the global leader in its field. The company reported last year that it was 'suffering in Germany in particular' and experienced a 4.1% revenue decline in its home market. Geissdoerfer said EBM-Papst's heating technology division lost 18.7% of its sales through a clumsily handled push to get property owners to replace gas furnaces with less polluting electric heat pumps. The requirements of the Building Energy Act put forward by Chancellor Olaf Scholz' three-party coalition were so confusing, people put off the upgrades to their heating systems or rushed to buy new gas devices before the law took effect, he said. That sapped demand for the ultra-quiet heat pump fans EBM-Papst makes. Consumers wondered, 'What is the right technology for my house?' Geissdoerfer said. 'And so everybody said, 'If I don't have to, I better wait.'' Geissdoerfer made a complaint heard across industry: Germany's bureaucracy is excessive. A 2023 law that requires public and private entities to combat climate change by reducing their energy use means EBM-Papst must assign employees to detail what the company is doing to comply, he said. 'So now, instead of implementing measures, they write and report,' the CEO said, adding that the documentation work is a poor use of time at a company whose core business is energy-saving equipment. 'I really hope with the new government we can get this solved, because at the moment it's too much.' EBM-Papst is moving in the direction where economists say Germany as a whole should put its industrial resources: into green and digital technology. The company, headquartered in Mulfingen, a town of 3,700 residents in rural southwest Germany, is equipping energy-hungry artificial intelligence data centers with efficient cooling systems for their servers. It also is working on incorporating AI features to help tech companies optimize their power use and to predict when equipment needs to be replaced. In the meantime, EBM-Papst is coping with Germany's economic malaise by shifting its investment focus to Asia and the United States. The company now supplies U.S. customers, for instance, from plants in Farmington, Connecticut,and Telford, Tennessee. Its moves to localize production abroad predate the coronavirus pandemic but give EBM-Papst a shield against any new import taxes imposed by U.S. President Donald Trump. Ties to China and Russia put Germany in a bind On top of the homegrown issues, international relations have dealt another blow. Russia cut off most of the country's natural gas supplies over the German government's wartime support for Ukraine. Electricity prices, a key cost for industry, have risen to 2 1/2 times higher than in the U.S. and China. Metalworking firm Mecanindus-Vogelsang Group, which makes precision parts for automakers and other manufacturers, says it pays twice as much per kilowatt hour for the electricity its German plants use as it does for its U.S. sites in Mt. Sterling, Kentucky, and Lakewood, New Jersey. That's 100,000 euros in added costs and 'a gigantic competitive disadvantage' CEO Ulrich Flatken said. 'To avoid deindustrialization, which is already taking place, we urgently need internationally competitive energy prices,' Flatken said. Another shock came from China, which throughout the 2010s served as a lucrative market for German-made machinery and automobiles. Once Chinese companies started making those same products, backed by government subsidies, German exports suffered. Germany's economy contracted in each of the last two years. By the end of 2024, it was only 0.3% bigger than it was in 2019, before the pandemic. The U.S. economy grew by 11.4% during over the same period, while China's expanded by 25.8%, according to Germany's Federal Statistical Office. Complacency and depression Marcel Fratzscher, president of the German Institute for Economic Research, thinks complacency set in during the boom years of exports to China. German companies weren't quick enough to respond to technological trends, such as the move to electric cars, he said. 'They enjoyed the success of the 2010s and they have been too slow in understanding that they need to change and adapt,' Fratzscher said. As the economic woes drag on, 'mental depression' has set in, he said. 'The pessimism is enormous among companies and citizens, and that's an important explanation why companies are not investing.' Many business executives and economists argue that Germany's next government should work to loosen constitutional limits on debt so it can increase public spending on infrastructure and education. Fratzscher wonders if political leaders, like the economy, will falter in adopting new ways of doing things. 'For the past 75 years, Germany has been built very much on consensus, stability oriented, lots of checks and balances in the political system, and that makes rapid change very difficult,' he said. 'We need to change the mindset, to understand we need to be much faster on economic transformations.'
