New 'super minister' to redefine Germany's energy transition

By Edgar Meza

Sigmar Gabriel will head a combined economy and energy ministry in Germany's new coalition government with a focus on lowering energy prices and boosting industrial output while rebooting the energy transition.


German Chancellor Angela Merkel unveiled her new cabinet on Sunday after months of negotiations between her conservative Christian Democrats (CDU) and the left-of-center Social Democratic Party (SPD) resulted in a grand coalition government that will be sworn in on Tuesday.


SPD Chairman Sigmar Gabriel, who served as environment minister under Merkel from 2005 to 2009, will now serve as vice chancellor and head a new "super ministry" that combines economy and energy policy. Gabriel will oversee the country's continuing energy transition away from nuclear power, although the new minister is expected to slow down the growth of renewable energy in the country – something he has long championed in view of rising energy prices due to renewable energy incentives.


By placing the energy transition completely under one ministry, the new government hopes to eliminate the often conflicting positions between the Federal Environment and Economy Ministries that shared oversight of the transition in the last government. The fact that Gabriel's Economy and Energy Ministry will now manage the transition also underscores the new government's focus on the country's industrial growth over environmental and climate change concerns, or possibly even the further expansion of renewable energy sources.


The SPD is a strong supporter of the German coal industry and renewable energy proponents have expressed concern that the party's close ties to the sector could further hamper further growth.


Indeed, the SPD, which itself enjoys backing from the coal mining industry as well as the German unit of Swedish energy giant Vattenfall, successfully pushed for a commitment by the new coalition government to support the use of brown coal, or lignite – known as one of the most polluting forms of coal -- to help lower Germany's exploding energy prices, currently the second highest in the European Union after Denmark, according to a recent report by Bloomberg.


Vattenfall is planning to expand brown coal strip mining in eastern Germany's Lusatia region, some 150 kilometers (94 miles) southeast of Berlin, where more than 80 villages have been razed and residents resettled, and the coalition agreement is seen as a major boost for the company.


In an interview with financial news magazine WirtschaftsWoche prior to the September 22 federal election, Gabriel laid out his views on the country's energy transition, arguing that Germany could not move away from both nuclear and coal power at the same time.


"Germany needs a new electricity market design because the current one does not accommodate renewable energy. Instead of building new gas-powered power plants, which we urgently need, ultra-modern gas-fired plants are being shut down," Gabriel told WirtschaftsWoche.


Gabriel has argued that Germany's energy transition poses a serious threat to the country's economy.


"If the energy transition is not completely restarted and finally managed in a professional manner, we will face the greatest deindustrialization program in our history," he said in the WirtschaftsWoche interview, adding that the pain threshold for citizens and businesses had been long exceeded with the current electricity prices. "A fundamental reform of the renewable energy law has been overdue for years."


According to German daily newspaper Süddeutsche Zeitung, however, Gabriel may actually be set to expand the energy transition rather than rein it in despite his past rhetoric.


In an article on Monday the paper points to Gabriel's pick for the post of state secretary at the new super ministry, Rainer Baake, a former official in the environment ministry and current head of the Agora Energiewende thinktank, which has closely examined Germany's energy transition.


"Gabriel is sending a signal to his own party with the appointment: Despite all the worries of the Social Democrats and trade unions about the future of coal-fired power, Energy Minister Gabriel now wants to further drive the energy transition rather than slow it down," the Süddeutsche Zeitung said.


The Sueddeutsche notes that Baake, who as state secretary would be Gabriel's deputy and right-hand man at the ministry, is highly independent and has no ties to major power companies. In the 1990s he also led a battle for greater safety at the Biblis nuclear power plant in the state of Hesse, which has since been closed down.


Meanwhile, in a statement last week by the German Solar Industry Association commenting on decreasing renewable energy incentives in Germany, managing director Carsten Körnig called on the new government to "ensure that investments in solar power plants become profitable again."


He added that proposed calls for tender planned for 2016 in the new coalition agreement were a "bad consolation prize" and would come too late in view of decreasing solar energy incentives.


"Germany's painstakingly developed expertise in this field of technology, which is in demand worldwide, is at risk if government policy is not reversed."


A halt in construction of solar parks in particular would have far-reaching consequences for the energy transition, making it more expensive, less efficient and slower, he added.


Yet some solar industry representatives see the potential for new opportunities under the new coalition government.


Karl-Heinz Remmers, CEO of Berlin-based service provider Solarpraxis (the pv magazine group's parent company), said in his column on Monday that the industry should make an effort to participate more in the decision-making process.


Germany's solar industry needs to take the initiative and offer its own proposals on such pertinent issues as a new energy market design; the future construction of large-scale, ground-mounted solar farms; solar energy levies for grid expansion and/or the apportionment of renewable energy costs, Remmers said, arguing that most renewable energy trade associations have so far resisted participation and dialogue.