On 1st July the German Presidency of the EU will start under the slogan ‘Together for Europe’s recovery’. Under the current deadlock in the negotiations on the multi-annual EU budget and the recovery instrument Next Generation EU launched by the Commission on 27 May, Germany will have to show very strong leadership to hold together a bloc whose gaps between great political ambitions and economic and social realities are increasingly evident.
It is no secret that Germany’s internal political and economic priorities are usually mirrored in Berlin’s European agenda. Therefore to get an idea of what the “green” priorities of the German Presidency will be in the post-pandemic era, it is useful to analyze the recent initiatives taken by the government in Berlin.
In December 2019, the government adopted the first national climate law, detailing annual reduction targets for individual sectors such as industry and transport until the year 2030. Germany is one of a handful of countries globally to have enshrined the goal of climate neutrality – that is reaching net zero CO₂ emissions – by or before 2050 in its national law. Then came the German government’s decision to focus its €130 billion economic stimulus program on future, more climate-friendly technologies such as e-cars. That’s by far the largest post-pandemic stimulus in Europe and even tops US’s, relative to gross domestic product. Germany can afford to increase government spending. Other EU Member States can’t. It is no coincidence that so far more than 50% of the total state aid authorised by the Commission for companies in difficulty due to the pandemic has been granted by Germany. No “green” strings have been applied to beneficiaries.
On 10 June the German government then adopted a specific hydrogen strategy, detailing a €9 billion action plan, mainly paving the way to “green hydrogen”, produced from renewables, over the “blue” hydrogen from natural gas in combination with Carbon Capture and Storage (CCS). This is perhaps the most innovative and radical choice to support the objectives of the EU Green Deal. The strategy presents an action plan enumerating a total of 38 measures the government plans to take in a first phase of a market ramp-up by 2023. In a second phase starting in 2024, the domestic market will be consolidated and European and international dimensions established, because Germany will have to import sizeable amounts of hydrogen in the medium and long term. Accordingly, the main priorities of the German presidency would include the development of a robust network of offshore wind energy in the North and Baltic Seas, as well as enhancing the storage, transport and distribution infrastructure by using existing gas infrastructure networks, but also by extending dedicated hydrogen networks or building new ones. Imports from “foreign countries” will condition, for better or for worse, the development of a European hydrogen market.
While leading the EU’s along the bumpy road towards climate neutrality by 2050, Germany must solve the problems of its wind power system. According to The Spiegel, at the end of this year, 5000 German wind farms are no longer eligible for any subsidies. Due to the coronavirus crisis and the falling wholesale price for natural gas there has been a significant drop in prices on the electricity market in recent months. Without subsidies, the operating costs of 5000 turbines will be unsustainable.
Financial support for renewable energy in the EU should increase exponentially in order to achieve the critical mass needed to support the Green Deal objectives. Ensuring access to the critical minerals, such as rare-earths, necessary for the construction of wind turbines and solar panels, is another serious problem to which the EU has so far paid little attention. About 80% of rare-hearts and more than 70% of the producers of solar panels are located in China.
Indeed, according to Politico, China will be one of the priorities of the German presidency. Berlin wants to develop “a robust EU strategy on China” during the coming six months, with an important summit of all EU leaders and Chinese President Xi Jinping scheduled for September 14. The Strategic Dialogue between the EU and China includes commitments to jointly address global challenges. Some of them will be even more important in the post-COVID-19 world. In particular, that to fight climate change and reach the objectives of the 2030 Agenda and the Paris Agreement, transforming EU and Chinese economies and societies in a green and sustainable way. It will be up to Germany to steer the dialogue with China in the direction indicated by the Green Deal, addressing the many issues that make dialogue with Beijing difficult today. Because, as highlighted by Bruegel, it is Berlin – and not Brussels – that will ultimately make or break the European Green Deal, but it is China that could provide most of the necessary tools to implement it.