German energy association calls for stability after coalition breakdown

German energy industry association BDEW has called for urgent legislative initiatives still to be approved in 2024 before parliament dissolves in January after the ruling three-way coalition collapsed late Nov. 6.

The sector fears months of energy policy gridlock in Europe's biggest economy.

"The current situation must not lead to important measures not being implemented," BDEW managing director Kerstin Andreae said in a statement. "It is therefore particularly important to bring those legislative initiatives to a close this year that are relevant to deadlines and cannot wait until next year."

BDEW is currently analyzing all pending energy policy reforms such as an amendment to the EnWG law to legislation to pave the way for tenders for new gas-fired power plants.

"Well-founded legislative plans should not fall victim to ideological or tactical calculation," BDEW said, calling for urgent action on matters where there is consensus.

"It is also not in the interest of the energy industry, security of supply and the energy transition if everything starts again from scratch after an election," Andreae said.

Chancellor Olaf Scholz (SPD) dismissed finance minister Christian Lindner (FDP), which marked the end of the coalition also including energy minister Robert Habeck's Green Party.

Scholz's remaining federal cabinet aims to pass ongoing legislation that is urgently needed to get Germany's shrinking economy back on track, before tabling a vote of confidence on Jan. 15.

That would lead to the dissolution of Germany's lower house (Bundestag) with federal elections in late March.

However, some politicians have called for an immediate dissolution of the Bundestag.

The opposition CDU/CSU, currently leading polls well ahead of Scholz's SPD, launched its New Energy Agenda on Nov. 5, outlining its views on energy policy, focusing on lower costs on Germany's pathway to net zero in 2045.

Coalition breakup

After three difficult years dominated by the war in Ukraine, record-high inflation and a struggling German economy, disagreements over financing issues culminated in recent days inside the coalition in Berlin.

In a leaked paper, Lindner called for relaxing emissions reduction laws, lowering taxes and doing away with Germany's ambitious climate objectives, demands that are hardly reconcilable with core positions of the SPD and the Greens.

"The government was formed on a different basis than what emerged after the Russian war on Ukraine," Habeck said late Nov. 6.

Renewables groups called for continuity during the transition phase, also pointing to key outstanding legislation.

"The end of the traffic light coalition amid the current national, European and international challenges is a political confession of failure," said Simone Peter, head of renewables association BEE.

BDEW also noted a European dimension to the political uncertainty in Berlin, with the new EU Commission expected to start in December, following months of standstill in Brussels after the European Parliament elections in June.

Here BDEW noted the upcoming delegated legal act on low-carbon hydrogen, which requires input from Germany as a core market.

German industry association BDI, meanwhile, called for a workable parliamentary majority as early as possible, fearing further uncertainty in 2025 with the start of a new US administration.

"In light of the current geopolitical situation and the poor economic development in Germany, there is an urgent need for a new, effective government with its own parliamentary majority," BDI said in a statement.

Constitutional hurdles

Future election results will continue to require the willingness to compromise across political lines, Scholz said in a speech late Nov. 6.

The chancellor pointed to Germany's economic and political challenges due to high energy prices and its responsibility to shore up European security in difficult times.

Recent polls from Infratest dimap showed only 16% of Germans would support his SPD if elections were held now, compared with 34% for the center-right CDU/CSU.

The Greens would reach around 11%, while the FDP is pegged below the 5% threshold required to enter parliament and the far-right AfD at 17%.

Energy and climate policy remain key political battlegrounds, framed by constitutional issues like the debt brake and the 2045 net-zero target.

High energy costs, in part, triggered by higher gas prices after the loss of Russian pipeline gas in 2022, and costs linked to the energy transition are a key reason for sluggish growth in Germany.

German gas prices have declined from record highs in 2022, with Platts assessing the front-month THE contract on Nov. 6 at Eur41.19/MWh ($12.95/MMBtu). Platts is part of S&P Global Commodity Insights.