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(Bloomberg) — Two years ago, Thyssenkrupp AG, the nation’s biggest steelmaker, was awarded €2 billion ($2.1 billion) in subsidies to help pay for a hydrogen furnace. It was the biggest-ever commitment of its kind, and a high point in Germany’s planned transition to clean fuel.
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Yet plans to burn hydrogen are now on hold. Since the government collapsed late last year, funding for key energy transition programs have been frozen, and the leading political parties have made clear that their priorities lie elsewhere.
Germany has spent billions in subsidies to cut carbon emissions by two-thirds by the end of the decade. But at a time when climate concerns remain largely unresolved, Europe’s biggest economy is set to scale back those efforts – and cede its position as the bloc’s frontrunner in the energy transition.
With the US under Donald Trump retreating from global climate efforts, countries across the world are looking to Germany to help close the gap. That may be wishful thinking, say people familiar with state workings. Meeting climate-related commitments had already been a challenge for the outgoing government of Social Democrat Olaf Scholz – whose coalition included the Greens and the pro-business Free Democrats — because of budget constraints, and the people said it’s very likely that climate-related funding will be cut further after the elections.
Given the reduced role of the US and the immediate social and economic risks posed by climate change, “the comprehensive embedding of climate policy measures in an overall political strategy is now more important than ever,” said Hans-Martin Henning, who heads a government climate advisory group. His organization recently released a report on the targets that still have to be met for Germany to reach its 2030 climate goals. Another report published this week by the foreign office and intelligence service ranked climate risk as among the top five threats to the country.
Both the conservative opposition, which is leading in the polls, and the outgoing Social Democrats have pledged to stick to the goal of hitting net neutrality by 2045. Yet in the wake of Trump’s return to the White House and a string of attacks by failed asylum seekers in Germany, they have prioritized security and immigration issues over the energy transition. Climate topics barely featured in a two-hour TV debate on Sunday in which the four chancellor nominees locked horns. The conservatives have also said that they plan to raise spending on NATO while sticking to the country’s strict borrowing rules, limiting how much room they will have to financially maneuver.
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