Germany News Brief and Action Alert

Germany: The Politics of Climate Change

November 20, 2025November 20, 2025

The driving force is no longer climate action for its own sake, but climate action as a tool for ensuring industrial competitiveness and economic growth. 

The formation of a new German government under Chancellor Friedrich Merz of the center-right Christian Democratic Union (CDU), who was formally elected on 6 May 2025, marks a significant shift in tone and priorities for Europe’s largest economy regarding climate and energy policy. The previous coalition, which included the environmentalist Greens party, pursued an ambitious regulatory agenda. In contrast, the new CDU-led alliance with the center-left Social Democrats (SPD) is framing its approach around economic revival, technological openness, and a more pragmatic path to decarbonization.

This analysis, drawing on recent reports, outlines the key features of this recalibration.

From “ideology” to “pragmatism”

A central theme of Chancellor Merz’s early leadership is a deliberate move away from what his government characterizes as ideological rigidity. In his first government declaration, climate policy played a minor role, with Merz emphasizing a “non-ideological and technology-open” approach focused on affordable energy prices.

This economic focus was welcomed by industry but drew criticism from environmental groups. For example, the NGO GermanWatch argues that while Merz affirmed climate targets, his policy plans lack a “credible implementation strategy” and that the government’s linking of security and industrial policy to climate action remains vague. In addition, GermanWatch points to the absence of specific measures linking lower energy prices to renewable expansion and a missed opportunity to commit to international climate funding.

Merz on the other hand has explicitly rejected claims from critics that his government is slowing the green transition, arguing instead for a form of climate protection that does not jeopardize Germany’s industrial base: “Climate protection that jeopardises or even destroys the industrial base of our country, climate protection that jeopardises our country’s prosperity – that will not be accepted by the population”, Merz stated. This statement underscores the new government’s core philosophy: climate action must be subordinate to, and integrated with, economic competitiveness.

Key Policy Shifts and Points of Contention

The new direction is manifesting in several concrete ways, which have drawn criticism from both opposition parties and environmental groups.

  1. A Focus on Market Mechanisms and Technology Neutrality: The government is emphasizing carbon pricing as a central tool, rather than regulatory bans or mandates. It is also championing a broader range of technologies, including Carbon Capture and Storage (CCS) and natural gas power plants as backup capacity, which were less favored by the previous administration. Critics contend that the government’s “pragmatic” and “technology-open” framework is not neutral. They argue it is a political choice to slow-walk the transition by favoring solutions that are less disruptive to the existing energy and industrial incumbents, thereby putting Germany’s legally binding climate targets at serious risk. 
  2. Scrutiny of the Energy Transition’s Pace: The new government argues that the previous administration’s renewable energy targets were set ambitiously without a sufficiently realistic assessment of the practical hurdles. Therefore, their “reality check” is presented as a data-driven review to ensure the Energiewende (energy transition) is feasible and cost-effective. While the government states this is necessary for prudent planning, critics fear it will be used to justify slowing down the rollout of wind and solar power. Activists warn the report could amount to “clientelism” for fossil fuel companies if it leads to support being cut for renewables in favor of gas infrastructure
  3. Leveraging International Carbon Markets: A quietly significant shift is the government’s openness to using international carbon credits to meet climate targets. Embedded in the coalition agreement is a pragmatic move to lower the cost of decarbonization. By funding emissions reductions in other countries, Germany can theoretically meet its targets more cheaply, a strategy that aligns with the new government’s economic focus. Critics argue that for Germany to truly become climate-neutral by 2045, its core industries—steel, chemicals, and cement—must be fundamentally reinvented using green hydrogen, renewable electricity, and circular-economy principles. Relying on international credits is seen as kicking the can down the road, purchasing time today but leaving the most difficult domestic decarbonization for future governments.

Record in the First Months in Office

Assessments of the government’s first months in office (since May of this year) suggest a mixed, somewhat hesitant start to its energy policy. While the coalition acted resolutely to lower energy prices for companies and passed a historic €500 billion special fund for investment, these actions were “overshadowed by announcements that some observers fear could slow or even undermine decarbonisation aims”. The government has yet to present a compelling, comprehensive climate action program, leaving investors and industry in lingering uncertainty. This uncertainty is compounded by internal tensions, such as the exclusion of households from an electricity tax cut, which contradicts the message of broad energy price relief.

Conclusion: Competitiveness as the New Leitmotif

The Merz government is not abandoning the long-term goal of climate neutrality by 2045, but it is fundamentally redefining the pathway to it. The driving force is no longer climate action for its own sake, but climate action as a tool for ensuring industrial competitiveness and economic growth. The government bets that a more pragmatic, market-led, and technologically diverse strategy will be more economically sustainable and politically palatable in the long run. To prove this model viable, the government could focus its approach on concrete initiatives that align with its economic priorities and deliver emissions reductions. For instance, implementing “Carbon Contracts for Difference” would provide the industry with the investment security needed to decarbonize, while fast-tracking legislation to accelerate grid modernization and hydrogen infrastructure would address critical bottlenecks without resorting to a broad slowdown of renewable projects. The success of this new model of “climate pragmatism” will depend on its ability to translate the government’s philosophy into tangible actions that effectively reconcile economic and environmental goals.

This Post was submitted by Climate Scorecard Germany, Monique de Ritter.

Edited by Diana Gastelum.

Learn More Resources

x
x

Climate Scorecard depends on support from people like you.

We are a team of researchers providing information on efforts to reduce global emissions. We help make you better informed and able to advocate for improved climate change efforts. Donations of any amount are welcome.