Germany's energy plans could change under new government

A new political wind is blowing into Berlin. The conservative CDU leader Friedrich Merz is trying to form a coalition with the center-left SPD. That could halt plans to relax the country's strict rules on government borrowing – known as the 'debt brake' – to cover increased expenditure, including on defense.

"It's out of the question in the near future that we will reform the debt brake," Merz said. "If it happens at all, it will be quite extensive and difficult work that needs to be done. I've also read that there is already speculation about a special fund. We are talking to each other, but it is far too early to say anything about it now. I see it as very difficult at the moment, but as I said, there are talks."

If there is no increase in government borrowing, that will make less cash available to look at diversifying Germany's energy options. 

Last year, the first full year since Germany closed its nuclear power plants, 59 percent of energy was generated by renewables - including 32 percent from wind and just under 15 percent by solar.

Since the conflict in Ukraine started, Russian gas and oil have been off the table for Germany. With manufacturing accounting for 42 percent of the country's energy consumption, keeping the power flowing to the Made in Germany brands is set to be a key topic in the next Bundestag. 

With the second-highest number of seats, the right-wing AfD looks set to be the main opposition. Its energy spokesman Stefan Notre told CGTN that his party will be pushing a drastic change to energy generation.

"It's relatively simple: We do what has proven itself in the past. That is nuclear energy," he said. "Coal will continue to be used for electricity generation. And of course there is cheap Russian gas, cheap Russian oil. And when we have that again, we will have a cheap energy supply again and, above all, a secure one."

Other options

There are other options beside what worked in the past. The northern port city of Hamburg has for centuries been an important trading link between Germany and the rest of the world. The Hanseatic hub is now set to take a crucial role in the future of Germany's energy transition.

Energy trading company Mabanaft is developing the 'New Energy Gate' at Hamburg port. Set to open in 2028, it will welcome ship-borne "green ammonia" that will then be converted to hydrogen and supplied to the power grid.

But this type of massive project doesn't come cheap. With industrial energy prices still 28 percent higher than before the Ukraine conflict, industry may prioritize cost reductions over decarbonization goals.

"We have years where there's more tailwind for decarbonization. And now I guess we're probably moving into a period where there's more headwinds," said Volker Ebeling, Mabanaft's Senior Vice President New Energy Supply and Infrastructure. 

"We as a company and most of our customers subscribe to the need for decarbonization, and jointly we need to figure out ways how to do that. But we do know that Germany has very high power prices, has high gas prices, and industry is struggling with the cost of energy. So it's a big challenge."

Charged with forming a new government, the conservatives have plenty to do, quickly. Manufacturing, and the industrial jobs Merz says he wants to protect, may well depend on him getting this right. 

With 30 percent of German manufacturers planning job cuts this year while 44 percent say conditions for business are deteriorating, reducing power costs would brighten that particularly gloomy outlook.