Tuesday, November 21, 2017

GWPF Newsletter: Mugged By Reality, Germany’s Climate Consensus Is Collapsing

Germany In Crisis As Coalition Talks Collapse

In this newsletter:

1) Germany In Crisis As Coalition Talks Collapse Over Climate Hysteria And Migration
AFP, 20 November 2017
2) Benny Peiser: Mugged By Reality, Germany’s Climate Consensus Is Collapsing
Global Warming Policy Forum, 20 November 2017

3) The Beginning Of The End Of Angela Merkel As Chancellor
Handelsblatt, 20 November 2017 
4) WSJ: Germany’s Green Energy Meltdown
Editorial, The Wall Street Journal, 18 November 2017 
5) Coal Emerges As Surprise Winner Of Un Climate Conference In Germany
Bloomberg, 18 November 2017 
6) Britain Threatens To Scupper EU Climate Law Over ‘Brexit No Deal’ Clause
The Sunday Telegraph, 19 November 2017 

Full details:

1) Germany In Crisis As Coalition Talks Collapse Over Climate Hysteria And Migration
AFP, 20 November 2017

Berlin – Chancellor Angela Merkel was left battling for political survival on Monday after high-stakes talks to form a new government collapsed, plunging Germany into a crisis that could trigger fresh elections. While the Green Party demanded to phase out coal power and combustion-engine cars, the conservatives and FDP emphasised the need to protect industry and jobs.

Angela Merkel stands with members of her party as she addresses the media after talks collapse

And with no other viable coalition in sight, Germany may be forced to hold new elections that risk being as inconclusive as September’s polls.

Merkel had been forced to seek an alliance with an unlikely group of parties after the ballot left her without a majority.

But following more than a month of gruelling negotiations, the leader of the pro-business FDP, Christian Lindner, walked out of talks, saying there was no “basis of trust” to forge a government with Merkel’s conservative alliance CDU-CSU and ecologist Greens.

“It is better not to govern than to govern badly”, he said, adding that the parties did not share “a common vision on modernising” Germany.

Voicing regret for the FDP’s decision, Merkel vowed to steer Germany through the crisis.

“As chancellor… I will do everything to ensure that this country comes out well through this difficult time,” she said.

The Greens’ leaders also deplored the collapse of talks, saying they had believed a deal could be done despite the differences.

The euro fell following the news, although analysts said the longer-term implications for the currency were not yet clear.

‘Failure in the air’

The negotiations, which turned increasingly acrimonious, had stumbled on a series of issues including immigration policy.

Merkel’s liberal refugee policy that let in more than a million asylum seekers since 2015 had also pushed some voters to the far-right AfD, which in September campaigned on an Islamophobic and anti-immigration platform.

The parties also differed on environmental issues, with the ecologists wanting to phase out dirty coal and combustion-engine cars, while the conservatives and FDP emphasised the need to protect industry and jobs.

Full story

2) Benny Peiser: Mugged By Reality, Germany’s Climate Consensus Is Collapsing
Global Warming Policy Forum, 20 November 2017

Germany’s utopian dream of transforming itself into the world’s green powerhouse is collapsing as its political and media establishment is mugged by reality. The country’s climate obsession has turned into one of the country’s biggest political and economic handicaps, making Germany almost ungovernable.

Germany faced a political crisis after a month of four-party exploratory talks about forming a so-called Jamaica coalition collapsed late on Sunday night. For the first time since the Weimar Republic (1919-1933), German parties with a majority in parliament are unwilling to form a Government. Nobody knows what happens next or how this deepening crisis can be solved anytime soon.

The inability to agree on contentious climate and energy policy issues together with disagreement over migration triggered the end of the exploratory coalition talks yesterday evening.

Most remarkable: Germany’s failed and increasingly unpopular climate policies are at the core of the crisis. It also signals the collapse of Germany’s decade-old climate consensus.

While the Green Party demanded the immediate shut-down of 10-20 of Germany’s 180 coal power plants, the Liberal Party (FDP) stood by its manifesto promise of a radical reform of the Energiewende, advocating the end to subsidies for renewable energy.

Experts at the Federal Ministry of Economics had warned participants at the exploratory coalition talks that Germany will miss its legally binding 2020 climate targets by a mile and that trying to achieve its 2030 goals would risk the economic prosperity of the country.

The Ministry also warned that any attempt to force a radical reduction of CO2 emissions “by 2020 would only be possible by partial de-industrialisation of Germany.”

Climate business as usual is no longer an option for the Liberals. The party fears that a fast exit from coal-fired power generation, as demanded by the Greens, would result in severe social, economic and political problems. A continuation of radical climate policies would affect Germany’s main coal regions, not least in Eastern Germany where the right-wing protest party Alternative für Deutschland (AfD) had gained significant support in the federal elections in September.

The Alternative für Deutschland (AfD) won nearly 13% of the vote in the general election in September and forms, with over 90 MPs, the third-largest group in the Bundestag. The party’s success has changed Germany’s political landscape and has ushered in the end of the green consensus among mainstream parties. To ensure that the cost of energy remains low, the AfD advocates the continued use of nuclear and coal-generated electricity. It opposes the Energiewende, stating that “energy must remain affordable and should not be a luxury commodity.” Claiming that subsidies for renewable energy are only benefitting well-off families and green businesses, their manifesto promised the abolition of Germany’s renewable energy law (EEG) together with all green energy subsidies.

As a recent editorial of the Wall Street Journal concludes: “No wonder voters are in revolt. The right-wing Alternative for Germany (AfD) won a surprising 13% vote share in part on a promise to end the Energiewende immediately. A new study from the RWI Leibniz Institute for Economic Research finds that 61% of Germans wouldn’t want to pay even one eurocent more per kilowatt-hour of electricity to fund more renewables.”

The dramatic success of the AfD means that for the first time a party is represented in the Bundestag that opposes Germany’s plans to cut CO2 emissions by moving to renewable energy. Its sceptical stance on climate and green energy issues has sent shock-waves through Germany’s political establishment who fear they can no longer afford to appease the Greens without losing further support among their traditional voter base.

Without the development of new pragmatic policies and a forceful defence of a cheap energy strategy in face of a rapidly fading (and ageing) green movement, Germany is unlikely to free itself from the green shackles that are hindering technological and economic progress, never mind political stability. Much of the green ballast that is holding Germany back will need to be thrown overboard if the country wants to regain political stability and economic pragmatism.

Just as East Germany’s socialist central planning failed miserably before it was overthrown and replaced by an open society based on liberty and free markets, Germany’s climate religion and green central planning will have to be discarded before it  can return to energy realism and economic sanity.

3) The Beginning Of The End Of Angela Merkel As Chancellor
Handelsblatt, 20 November 2017 

Reports of the end of the Merkel era, like those of Mark Twain’s death, have long been greatly exaggerated. Not anymore.

Something big happened yesterday in Berlin just before midnight — big for Germany, for Europe, perhaps even for the world, but above all for the person who has of late been considered the leader of the free world: Chancellor Angela Merkel.

For 12 eventful years, mostly overshadowed by crises, Ms. Merkel has honed an impressive talent for political survival and for facilitating compromise among people — whether domestic politicians or foreign leaders — who are natural adversaries. But late on Sunday, November 19, this reputation took a hit from which she may never fully recover. When future historians look back at the Merkel era, they will choose this date as the beginning of its end.

It was Christian Lindner, leader of the classically liberal and pro-business Free Democrats — usually closely aligned with Ms. Merkel’s Christian Democrats — who delivered the blow. Standing in a gloomily autumnal night outside outside the negotiation venue, Mr. Lindner unilaterally and abruptly pulled his party out of the complex exploratory talks between four parties who were, under Ms. Merkel’s aegis, to form Germany’s next governing coalition. The ultimate reason, he said, was a “lack of trust” across the table.

Week upon frustrating week, the four parties had been haggling, usually late into the night. It didn’t help that several of the negotiators have long histories of loathing one another. The Greens spent much of their 37-year existence vilifying the Christian Democratic Union, and especially the Christian Social Union (CSU), the conservative party that rules in Bavaria. They also disdain the Free Democrats, whom they consider heartless yuppies.

The CSU folks from Bavaria, by turn, have, as is their wont, spent weeks denigrating the Greens as naive hippies bent on putting real-world, close-to-the-soil farmers out of a living; on shutting Germany’s economy down with pie-in-the-sky dreams about ending coal power; and on allowing Germany to be overrun by the families of Muslim refugees. Most of this was Bavarian hyperbole. But their motivation was simple: The CSU is panicking about the rise of a populist party, The Alternative for Germany, on its right. The AfD, the CSU reasonably fears, could sabotage the CSU’s traditional claim to dominance in Bavaria, one year before that state holds its next election.

The Free Democrats and Mr. Lindner, meanwhile, are still suffering the post-traumatic stress disorder from the consequences of their last coalition with Ms. Merkel. In 2013, after four years of undistinguished governing as the chancellor’s junior partner, the Free Democrats were ejected from the Bundestag for the first time in postwar history. Mr. Lindner’s conclusion was that his party must never again sacrifice its principles in the name of compromise.

Unfortunately, that is everybody’s conclusion. And for that, too, Ms. Merkel bears much of the blame, for she has made every one of her coalition partners look bad. This is also why the only viable alternative to the four-way coalition that Mr. Lindner just killed is a no-go. It would be a continuation of the “grand coalition” between the Christian Democrats and the center-left Social Democrats. But the Social Democrats have already twice served their patriotic duty as Ms. Merkel’s understudies — from 2005-2009 and from 2013 till now (their joint caretaker government is still minding the shop). Each time, they were punished at the ballot box. This time, their leader, Martin Schulz, visibly depleted after a joyless campaign to replace Ms Merkel, has decided to go into opposition against her, and to find some new theme that could energize the Social Democrats in the years to come. Probably wisely.

So nobody wants to play with Ms. Merkel. This will accelerate murmurs inside her Christian Democratic Union about finding an heir or heiress. Handelsblatt Global will soon profile some of the options. But the fact that there is no clear list must count as another minus against Ms. Merkel’s record. For the mission of any leader, in any field of life, explicitly includes thinking ahead to an orderly succession. Ms. Merkel, by contrast, has focused her prodigious skills on eliminating potential rivals. This omission will come back to haunt her.

What happens next in Germany is not yet clear. A last-minute compromise by either the Free Democrats or the Social Democrats remains possible, but is unlikely. Another option is a minority government, in which Ms. Merkel governs with less than a majority of the Bundestag, hoping in each vote of the chamber that the opposition parties “tolerate” her. This is common in other democracies. But Germany has never had such an arrangement at the federal level in its postwar history, and for good reason: After the trauma of the failed Weimar Republic, the Federal Republic learned to prize stability, and a minority government is hardly stable.

Nor are snap elections as easy as they are in some other European countries, and for the same reason. With Weimar in mind, postwar Germany’s founding fathers in 1949 made it deliberately hard for parliament to dissolve itself and to call for new polls. This is the one situation where the constitution gives Germany’s president — currently Frank-Walter Steinmeier, an avuncular Social Democrat — an actual role to play. But Mr. Steinmeier looks askance at new elections. In any event, polls suggest that a new vote would deliver almost exactly the same stalemate.

The upshot is that Germany, a country that Europe and the world have grown accustomed to considering tediously stable, will now remain in limbo for weeks, perhaps months. This is where the German crisis and Ms. Merkel’s fate enter the agenda in Brussels, Paris, London, Moscow Washington, and Beijing.

Not long ago, only this spring, right-thinking wonks in Berlin were worrying about a weak France and an excessively strong Berlin. Their concern was based on the — correct — premise that Europe tends only to advance when Paris and Berlin work together. And Paris was at risk of falling to an EU-bashing Marine Le Pen. When it didn’t, and a youthful hunk named Emmanuel Macron became president, he was seen as at risk of failing. The German establishment was planning on toning down its power as Europe’s economic engine.

The plan was for Ms. Merkel, after a comfortable re-election, to allow Mr. Macron to celebrate some photogenic victories. Together, the thinking was, Germany and France would then fix the euro zone, where economic imbalances remain. Together, they would stave off a meddling Vladimir Putin to the east, contain an impulsive Donald Trump in the west, and manage a Machiavellian Xi Jinping to the Far East.
Instead, the situation is the reverse. If Europe has a leader at all, it is Mr. Macron. It is now his turn to worry about Germany being too weak to assist in the triumphs he needs to reform France and Europe. For his part, Mr. Trump is unlikely to grasp the situation, or to take much interest. But Mr. Putin must be doing cartwheels. Germany’s economy may run well enough to keep humming, perhaps even to thrive, in the absence of a German government. But Europe and the world cannot afford such a hiatus in the center of the continent. If Ms. Merkel no longer has the stature to explain that to Germany’s pusillanimous partisans, Mr. Steinmeier should.

4) WSJ: Germany’s Green Energy Meltdown
Editorial, The Wall Street Journal, 18 November 2017 

American climate-change activists point to Europe, and especially Germany, as the paragon of green energy virtue. But they ought to look closer at Angela Merkel’s political struggles as she tries to form a new government in Berlin amid the economic fallout from the Chancellor’s failing energy revolution.

Berlin last month conceded it will miss its 2020 carbon emissions-reduction goal, having cut emissions by just under 30% compared with 1990 instead of the 40% that Mrs. Merkel promised. The goal of 55% by 2030 is almost surely out of reach.

Mrs. Merkel’s failure comes despite astronomical costs. By one estimate, businesses and households paid an extra €125 billion in increased electricity bills between 2000 and 2015 to subsidize renewables, on top of billions more in other handouts. Germans join Danes in paying the highest household electricity rates in Europe, and German companies pay near the top among industrial users. This is a big reason Mrs. Merkel underperformed in September’s election.

Berlin has heavily subsidized renewable energy since 2000, primarily via feed-in tariffs requiring utilities to buy electricity from renewable generators at above-market rates. Mrs. Merkel put that effort into overdrive in 2010 when she introduced the Energiewende, or energy revolution.

The centerpiece is the escalating emissions-reductions targets Germany now is missing, which surpass the 20% reduction by 2020 to which the rest of the European Union has committed. The policy is also supposed to reduce total energy consumption to 50% of the 2008 level by 2050, with a 25% reduction in electricity use.

That was a tall enough order for an industrial economy. Then Mrs. Merkel made it even harder in 2011, with a hasty promise after Japan’s Fukushima disaster to phase out nuclear power by 2022.

Energiewende enthusiasts say the policy is racking up successes despite the problems. That’s true only in the sense that if you throw enough money at something, some of the cash has to stick. In electric generating capacity, for instance, renewables are now running almost even with traditional fuel sources.

Yet much of that capacity is wasted—only one-third of Germany’s electricity is actually generated by renewables. Berlin has invested heavily in wind and solar power that is easiest to generate in parts of Germany that need the power the least, especially the north. Berlin will need to spend another huge sum building transmission lines to the industrial south.

The other costs relate to providing electricity when the wind doesn’t blow and the sun doesn’t shine, which is often in Germany. The traditional plants needed to fill in the gaps are overwhelmingly fired by coal, on which Germany still relies for roughly 40% of its power.

Natural gas would be cleaner and is easy to switch on and off. But gas is more expensive than coal, and the peak daytime consumption hours when gas could recoup that investment are also the times utilities are more likely to be required to buy overpriced solar power.

As a result, natural gas accounts for only 9.4% of Germany’s electricity, down from a little over 14% in 2010. Gas accounts for some 30% of U.S. electricity generation, and the shift to gas from coal explains a majority of the reductions in carbon emissions in U.S. generation since 2005, according to a report last month by the U.S. Energy Information Administration. German households pay nearly 36 U.S. cents a kilowatt-hour of electricity, versus an average of 13 cents in America.

No wonder voters are in revolt. Surveys say that in theory Germans like being green, but polls about household energy costs say otherwise. The right-wing Alternative for Germany (AfD) won a surprising 13% vote share in part on a promise to end the Energiewende immediately. A new study from the RWI Leibniz Institute for Economic Research finds that 61% of Germans wouldn’t want to pay even one eurocent more per kilowatt-hour of electricity to fund more renewables.

This is casting Mrs. Merkel’s coalition talks into disarray. Her prospective Green Party partners want to double down on Energiewende distortions by banning coal, starting with the 20 most-polluting plants. Mrs. Merkel’s center-right Christian-Democratic parties and the free-market Free Democrats are willing to close 10 plants at most, in recognition that more would strangle the economy of energy absent nuclear power after 2022.

Full post

5) Coal Emerges As Surprise Winner Of Un Climate Conference In Germany
Bloomberg, 18 November 2017 

Coal emerged as the surprise winner from two weeks of international climate talks in Germany, with leaders of the host country and neighboring Poland joining Donald Trump in support of the dirtiest fossil fuel. 

An excavator mines brown coal on Friday at the Hambach mine near Kerpen, Germany. | AP

While more than 20 nations, led by Britain and Canada, pledged to stop burning coal, German Chancellor Angela Merkel defended her country’s use of the fuel and the need to preserve jobs in the industry.

Meanwhile Poland’s continued and extensive use of coal raised concerns that the next meeting, to be held in the nation’s mining heartland of Katowice, could thwart progress.

“People don’t have total confidence that Poland wants to increase ambition, to put it plainly,” said Alden Meyer, director of strategy at the Union of Concerned Scientists, an advocacy group. “They’re 80 percent dependent on coal, they’ve been pushing back against European Union proposals to increase ambition.”

A growing group of countries are promising to end coal use altogether, saying its economic appeal is diminishing as carbon taxes push up costs while solar is increasingly competitive. Merkel herself led the world in installing renewable energy in recent years, but the pressures of forming a new government have seen her waver.

Her change of tone at the Bonn talks, which were already clouded by Trump’s vow to take the U.S. out of the landmark Paris accord, fueled concern over the deal’s future as delegates look nervously to Katowice.

Full story

6) Britain Threatens To Scupper EU Climate Law Over ‘Brexit No Deal’ Clause
The Sunday Telegraph, 19 November 2017 

Britain is threatening the future of EU climate change legislation after a ‘Brexit no deal’ clause was added to a bill being voted on in Brussels this week.

The clause would ban British industry from selling its carbon emission allowances on the market after Brexit in the event of no deal.

British representatives could back a Polish-led coalition of coal-addicted countries against members including Germany, France and the Netherlands to scupper the bill, which would delay reforms to the Emissions Trading System (ETS).

If the bill fails to pass, it would be the first time Britain has used its voting powers in the EU as an outlet for its frustrations with the deadlocked Brexit negotiations.

One EU source said: “Britain is threatening to vote against the bill. British officials are trying to find ways to avoid a stand-off but they are under political orders from London.

“This isn’t about climate, it’s about money, power and Brexit,” a second source said, “This is a crisis which could delay or wreck these vital reforms, years in the making, to drive up the carbon price by reducing allowances on the market.”

Each year the EU distributes carbon allowances to its members to sell to industry.  Unused carbon permits, each equivalent to a million tonnes of carbon emissions, can be traded on the market as an incentive for polluting industries to go green.

The ‘Brexit clause’ would stop ‘British’ carbon allowances flooding the market in the event of a ‘no deal’, when Britain would leave the ETS, as this would further depressing the already low price per permit of around €7, which plummeted from a 2008 high of  €30 after a glut of allowances were released.

On Friday in Gothenburg, Sweden, European Council President Donald Tusk warned Theresa May, who has already offered Brussels €20 billion to begin talks, that more progress was needed on the Brexit bill and Ireland to break the deadlock.

The same day, at a UN climate change conference in Bonn, Germany, Britain refused to budge after coming under sustained pressure from Germany, France, the Netherlands and the European Commission to cave over the clause.

If the reforms are voted down, the legislation would face a time-consuming “second reading” in the European Parliament and Council of Ministers, which must ultimately agree an identical text. Countries hostile to the reforms will be further emboldened by Britain’s defection to water down the new version of the bill.

One EU diplomat said efforts were underway to lure Bulgaria and Romania away from the blocking minority, while another told the Sunday Telegraph that he was “not surprised” by the British stance.

Britain, which has vowed to live up to its UN climate commitments under the Paris Agreement, has put forward an alternative proposal to push back the annual day for allowance distribution to after Brexit day. UK officials argue the Brexit clause will sap confidence in the market, which is based on the source of allowances remaining secret.

Full story

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at

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