Battleground Energiewende, part I

How Germany's conservatives are trying to navigate the stormy waters of renewable energy in election year 2013

Germany's environment minister Peter Altmaier of the CDU opened the election year debate over the Energiewende with a bombshell: he proposed that the renewable energy surcharge paid by consumers (currently 5.3 cents kWh) be frozen for two years, that some previously exempt industries step up to pay at least some of the costs, and that owners of clean energy production facilities chip in to cover costs. The proposals led to a storm of criticism. Regardless of who is wrong and right, what the affair illustrates above all is that the Energiewende is already a prickly, fast-moving campaign topic. The conservatives (CDU and CSU)  in particular often reveal an ambivalent attitude towards their own Chancellor's prestigious project. In the first part of a two-part series, Berlin correspondent Paul Hockenos explains the conflicting attitudes of the various conservative factions towards green policies.

On the surface at least there's a great deal of consensus among Germany's entire political class on energy policies (c) Julian Stratenschulte/dpa
Germany's Chancellor Angela Merkel isn't going to have an easy time of it capitalizing on the Energiewende in this election year, even if it was Merkel who popularized the moniker in the aftermath of the 2011 Fukushima nuclear disaster in Japan.

Sure, on the surface at least there's a great deal of consensus among Germany's entire political class on energy policies. For one, in word, all six of its main parties are committed to transitioning to an economy run on renewables and defend an Energiewende to that end. Moreover, there's no party that openly advocates un-shuttering the nuclear reactors that the Merkel government closed down in the aftermath of Fukushima in 2011 or trying to extend the lifespans of the remaining plants that are scheduled to be mothballed completely by 2022. And there's unanimous agreement that climate change is real, man-made, profoundly dangerous, and largely attributable to the burning of fossil fuels.

But scratch beneath that surface and there's an enormous amount of contested terrain - even within the ruling coalition - on just about every issue from clean energy subsidies to carbon trading to grid expansion. There's much more that's up for grabs than in, for example, the eurozone policies, where Merkel's approach is largely accepted. Altmaier's little bombshell this week is an attempt by the government to stake out some of that terrain, getting a jump both on the opposition and competing factions in the coalition itself.  Time will tell whether it captured strategic high ground for the government or blew up in its face.

Indeed, Merkel and Altmaier - both unideological pragmatists who skillfully moderate between competing factions - have to negotiate a wide-range of opinions, not only in the coalition but even in Merkel's own Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social

Scratch beneath that surface and there's an enormous amount of contested terrain - even within the ruling coalition - on just about every issue from clean energy subsidies to carbon trading to grid expansion
Union (CSU). "In principle there is a consensus within the CDU concerning the final targets of the Energiewende," explains Christian Hübner of the Konrad Adenauer Stiftung in Berlin, pointing out that the Energiewende goals were put into writing by the coalition in 2010, before Fukushima. "But there's a fierce debate in the party about the best way to get there," he says. "The government's shift in the aftermath of Fukushima produced a whole new context for reaching those goals and now there's an intensive discussion about costs in general and the transmission grid, among other issues, that hadn't been front-burner issues before."

Minefield

"The battles over the costs of the Energiewende, the share of renewable energies and other technologies, grid extensions, and so on that you read about in the newspaper everyday are the same that are going on within the party," explains David Jacobs, a policy analyst at the International Institute for Stability Studies in Potsdam.

The CDU is so important because it is currently leading Energiewende policy, and it is likely that the popular chancellor will be returned to office later this year in one coalition or another. Yet the heterogeneity of views in the center-right coalition makes it agonizingly difficult to pin down Merkel or her environment minister on key Energiewende policies. At some occasions, Merkel, herself a former environment minister in the 1990s, and Altmaier sing the Energiewende's praises and emphasize their staunch commitment to it; at others they urge caution, warn about going forward too quickly, condemn high electricity prices they attribute to the transition, or vaguely express regret about "decisions" made in haste. The environment ministry proudly champions the booming renewables industry, but then insists that the law that made it all possible, the Renewable Energy Act, be substantially reformed - but is very vague on the specifics of how or when. The most recent proposal doesn't clarify things much, except to illustrate what a minefield Energiewende politics are for the chancellor.

One wing of the CDU is old-school conservatives who for decades represented the interests of the petrochemical and nuclear energy sector, and who strongly backed the pre-Fukushima extension of the lifespans of Germany nuclear power plants. This faction of Energiewende skeptics includes the likes of Michael Bareiss, the CDU/CSU parliamentary group's spokesperson for energy issues; Michael Fuchs, a leading CDU MP from Koblenz; and Joachim Pfeiffer, chairperson of the Bundestag's economic policy committee. Merkel's Fukushima epiphany and embrace of the Energiewende spelled the end to these denizens' renaissance in 2009 and 2010, which was substantially aided by the Christian Democrats' new junior coalition partner, the liberal Free Democrats.

With the nuclear issue now closed and fossil fuels generally frowned upon, this faction together with just about the entire FDP tends to attack the Energiewende with other ammunition. The cost to the consumers and small-and-medium-sized businesses has taken center stage since the hike last year

In principle there is a consensus within the CDU concerning the final targets of the Energiewende. But there's a fierce debate in the party about the best way to get there
of the per kilowatt surcharge from 3.6 to 5.3 cents kWh. Moreover, this faction stresses a "competitive" energy market (in contrast to the subsidizing of renewables); energy supply stability (over a baseload comprised of wind and PV); low energy and carbon certificate prices for industry; and a "less regulated market." For two winters in a row, namely since Merkel's Fukushima turn, these voices have warned in the direst tones of black-outs, power outages, and prostate industry as a result of Energiewende policies. They also stress that Germany's competitiveness abroad is being undermined by grid instability and energy prices jacked up by subsidies. So far their predictions have not come true: there have been no major blackouts and in 2012 Germany posted a record-breaking net export balance of over a trillion euros.

Common man

The views of the CDU/CSU energy hawks and the lion's share of the FDP are largely identical. Indeed the foremost spokesperson of this faction is not a Christian Democrat at all, but rather the current Economic Policy Minster, Philipp Rösler, who is also the FDP party leader. Rösler is the predominant Energiewende skeptic in the government - although he gingerly avoids contradicting his superior, Ms. Merkel, by saying as much in plain words. His actions though speak for themselves.

As vice-chancellor and head of the powerful economics ministry, he has flexed his muscles again and again on energy policy. Rösler has blocked the CDU-run environment ministry's efforts to boost energy efficiency measures on both the national and the EU level, and undermined higher pricing of ETS carbon prices. The FDP led the charge to cut the feed-in-tariff for PV, and openly proposes further cuts, and including a "capping" of renewables' growth. In short, he advocates abandoning the feed-in tariffs for renewable energy in favor of a quota system. Rösler and his party pushed through and adamantly support the sweeping exemption of industry from Energiewende costs. And, somewhat awkwardly, Rösler's pro-business party and the CDU hawks have found a heart for the common man with low-income who has to shoulder the energy surcharges along with other energy consumers.

Tellingly, although the FDP greeted the price-freezing element in Altmaier's recent proposal, it and the industrial lobbies object to cutting back on the tax exemptions for industry.  In a move to outflank the FDP, Altmaier announced his proposal without even informing  Rösler - a small payback for the many times the economic policy ministry blindsided its lighter-weight counterpart dealing with the environment. But the fact remains that neither the FDP as a party nor the economic policy ministry would support the proposal as it presently stands.

Weltanschauung

Despite its considerable clout, the hawkish strain among German conservatives is no longer predominant in the CDU - and hasn't been since the Fukushima disaster. "The CDU is Angela Merkel's party," explains Severin Fischer of the Berlin-based Institute for International and Security Affairs, "in which Chancellor Merkel dominates the discourse. When she abandoned nuclear energy and embraced the Energiewende so did most of the party - some more effortlessly than others, certainly, but most of the party fell in line behind her."

The Christian Democrats have had an environment-friendly and pro-renewable energy wing since the 1980s, which since then has grown in size and power. In line with a conservative weltanschauung, it

The heterogeneity of views in the center-right coalition makes it agonizingly difficult to pin down Merkel or her environment minister on key Energiewende policies

emphasizes environmental justice for future generations, ecological conservation, and opportunities for entrepreneurs. Few observers remember that it was not the Greens who initiated a feed-in-tariff rewarding entrepreneurs for the successful operation of renewable energy plants in Germany, but rather Helmut Kohl's government in the early 1990s. More recently, the numbers of Christian Democrats who could imagine a CDU-Green coalition (as has existed on a Länder-level in Hamburg and the Saarland) have swelled to the point that many now think it conceivable on a national level.

The highest profile figure in this faction had been the young environment minister Norbert Röttgen, until he was replaced by Altmaier in 2012. Today people like the current CDU state secretary in the environment ministry, Katerina Reiche, and head of the Bundestag's chairperson for the nuclear waste committee, Maria Flachsbarth, come to mind as clean energy progressives, to name just a few. Like others, Reiche, from Brandenburg in former eastern Germany, is a new recruit to the environment wing, a consequence of the burgeoning renewables industry in the hard-hit eastern states.

"There's long been a deep divide on energy issues," explains David Jacobs of the IISS, "between those CDU members in the Bundestag's economic policy committee, which is responsible for conventional energy, and those on the environmental committee, who deal with renewables. The latter, like Flachsbarth, have been exposed to a lot of very progressive ideas over the years and some of them have sunk in," explains Jacobs. "They, for example, have defended the feed-in tariff against intrusions from their own party peers."   

Unlikely bedfellow

This segment of the CDU is joined by an unlikely bedfellow, namely the CSU, which for decades had been viewed as he CDU's arch-conservative little sister. Yet Germany's energy market liberalization and the growth of the renewable energies supply has shifted power and created powerful, new interest groups in Germany.

One of the best case studies of this phenomenon is the greening of the CSU. "Bavaria's farmers and the extremely powerful Bayerische Bauernverband," says Joachim Müller-Soares, editor-in-chief of BIZZ Energy Today, a business magazine devoted to renewable energy industries, "are now on the side of the Energiewende and the CSU can't ignore that if it wants to remain the biggest party in Bavaria. Things have changed dramatically in Bavaria and the CSU has very smartly changed with them."

The Energiewende has made tens of thousands of property owners in Bavaria into small-scale energy producers, above all in the PV sector. Bavaria leads all of Germany in PV capacity. Energy crops have proven a life saver for many farmers whose livelihoods had been threatened by falling crop prices. Bavaria has 2,372 biogas producers, the most in Germany, and more Bavarians are employed in the renewables branch (68,850) than in any other land.

This transformation has left the CSU - perennially the strongest party in Bavaria since the Federal Republic's founding in 1949 - with no real choice but to go green and fight for its citizenry's new vested

"Bavaria's farmers and the extremely powerful Bayerische Bauernverband are now on the side of the Energiewende and the CSU can't ignore that"
interests at the local, state, and federal level. The 2011 vote in Baden Württemburg revealed just how dangerous not changing with the times could be for the Christian Democrats: The Greens captured more votes than any other party and now lead a green-red coalition in a state that had been CDU-run since World War II. Just last year a first-ever Green mayor was voted into office in Stuttgart, Baden Württemburg's capital.

CDU hawks

In the CSU the foremost advocate of a pro-active Energiewende is the outspoken MP Josef Göppel, whose website might first strike one as belonging to a Green MP. Göppel responded immediately to the new Altmaier proposal with a blistering rebuttal, charging that "the most successful elements of the Energiewende - PV and onshore wind - are being punished." He goes on to argue that high-tech smart transmission grids and cutting-edge demand management  are the way to go in a revamping of Germany's energy market. The Altmaier plan, he argues, "reads like an appeal to vote ‘red-green' if you don't want to put the brakes on the Energiewende." In the press release, Göppel takes an oblique swipe at what he interprets as the coalition's preference for offshore wind over onshore, yet another fault line that runs through the conservatives.

Indeed the Altmaier plan has no chance of passing if the CSU is not on board. It is for this reason that most observers see Altmaier's proposal more as political maneuvering than serious policymaking. It has very little chance of ever becoming law, also because the Bundesrat, Germany's upper house of parliament, is now in opposition hands.

The upshot of the conservatives' diverse energy stances is that, if indeed the CDU/CSU win in September, their choice of junior coalition partner will be extremely important for the fate of the Energiewende. If the current coalition is returned to power, the standoff between CDU hawks and the

"The CDU is Angela Merkel's party. When she abandoned nuclear energy and embraced the Energiewende so did most of the party"

FDP, on the one hand, and CDU energy progressives and the CSU, on the other, will simply continue. However a grand coalition with the Social  Democrats (SPD) would look different. Even though the SPD is itself divided on energy issues, it worked well on energy with the conservatives during the 2005-2009 term. The CDU hawks would be pushed to the margins and the Energiewende would go forward cautiously. And then there's the intriguing possibility of a "black-green" coalition between the Christian Democrat parties and the Greens. There's plenty of overlap on energy policies if Merkel finally decides to advance as enthusiastically as she sometimes champions the Energiewende.

There is also the possibility that the Christian Democrat parties aren't voted back into office, as recently happened in the regional elections in Lower Saxony. There, the SPD and the Greens were victorious just as they had been of late in Schleswig Holstein, Hamburg, Baden Württemberg, and North-Rhine Westphalia. The specter of a red-green victory is the real source of the Altmaier proposal. If, in the unlikely event that it wins approval in the government's own ranks and passes through the Bundestag, the Bundesrat will surely shoot it down. That could be just what Altmaier really wants: it would enable the government to point to the opposition as the unapologetic defenders of high energy prices.

It could backfire, too. The Merkel government has attached its name to the Energiewende. If it can't put a positive spin on its own creation, it might be dragged down with a flop of its own making.

This is part 1 of a two-part series. In the second part, Paul Hockenos will discuss the energy views of the opposition parties.