Coalition Agreement: How a traffic light turns the economy inside out


analysis

Status: November 24, 2021 19:26

Thanks to the coalition agreement that has already been signed, the future traffic light government wants to set a course for a socio-ecological market economy. What exactly does this mean for businesses?

Author: Notker Blechner, tagesschau.de

The traffic light coalition of the SPD, the Greens and the FDP is planning to restructure the economy: they want to transform Germany into a climate-neutral industrial country. Thanks to the coalition agreement signed by three parties today, “compliance of prosperity with climate protection” should succeed, emphasized the leader of the Co-Green Party, Robert Habeck. “We are setting a course for a socio-ecological market economy and introducing a decade of future investments,” says the 177-page agreement.

The withdrawal of coal is coming as early as 2030.

At the heart of the red-green-liberal economic model is the shift from fossil fuels to renewable energy. The phase-out of coal is to be postponed by eight years by 2030. Electricity that is no longer needed will increasingly come from solar and wind energy. The share of green electricity is growing massively. By 2030, 80% of electricity consumption should come from renewable energy sources. So far, only 65 percent was planned.

More solar energy thanks to the need for a solar roof

Signaling events have especially high hopes for the sun. About 200 gigawatts of power in solar parks and photovoltaic systems are expected to be installed by 2030. That would be a good three times more than is currently being built.

This should be achieved, inter alia, thanks to new specifications such as the mandatory use of PV roofs for new commercial buildings. When new private homes are built, the roof surfaces should also be used for solar energy when possible.

Wind energy is being developed further

Onshore and offshore wind energy is also promoted. In the future, 2% of the federal area is to be reserved for onshore wind energy. The planned capacity for offshore wind farms is at least 30 gigawatts by 2030. So far, 20 gigawatts have been planned. By 2045, capacity is expected to more than double to 70 gigawatts.

To overcome obstacles to the expansion of onshore wind energy, priority should be given to renewable energy bearing in mind, for example, nature conservation objectives. Planning and approval procedures are to be accelerated.

New gas power plants as a transition technology

As long as renewables are not sufficient to meet the electricity demand, new gas-fired power plants will be needed as a transition technology. The coalition agreement provides for the construction of modern gas power plants. However, they must then be convertible to action with hydrogen. By 2040 at the latest, natural gas is to be abandoned for energy production.

The housing industry must prepare for the imminent end of natural gas heating systems. In new buildings, fuel should no longer be used in the next few years. Natural gas heating systems in existing homes are to be replaced by the mid-1930s.

Electricity customers are exempt

However, businesses and citizens should be relieved of energy costs. From 2023, the billions of EEG-surcharge funding is to be lifted to promote green electricity through the price of electricity. Energy-intensive businesses in particular have been hit in particular by the EEG-surcharge. The subsidy will be financed by the Energy and Climate Fund, which is supplied with revenues from CO2 valuation and subsidies from the federal budget.

15 million electric cars by 2030

The energy transformation will also change the automotive industry enormously. By 2030, the traffic light coalition wants to put at least 15 million electric cars on the road – with state subsidies. The end of combustion engines by 2030, as called for by the Greens, was not provided for in the coalition agreement. In this regard, the plans of the European Commission are still in force to stop combustion engines from 2035 on.

In addition, the future traffic light government is pushing for the expansion of the charging station infrastructure and the research, production and recycling of battery cells. “We make Germany the leading market for e-mobility,” says the coalition agreement. According to automotive expert Ferdinand Dudenhöffer, “it sounds a bit like Christmas and Easter at the same time.” However, you can’t find anything specific – neither in funding, nor in measures such as the taxation of fossil fuels.

The Bahn is not broken

By having more money for rail and local transport, traffic lights want to increase the speed of turnaround. There are no plans for radical measures, such as the abolition of allowances for commuters, as some climate activists have called for.

Even the state-owned Deutsche Bahn has not undergone radical structural reform. The SPD rejected the division of railways required by the FDP into infrastructure and rail operations. The coalition agreement only stipulates that in the future infrastructure units will be merged, inter alia, by within the group with DB Netz, creating a new division, “oriented to the common good”.

Marijuana is legalized

One sector of the economy is already considered to be the primary beneficiary of the government’s traffic light: the cannabis industry. Coalition partners want to legalize recreational marijuana in Germany. “We are introducing controlled sale of marijuana to adults for recreational purposes in licensed stores,” says the coalition agreement. In this way, the quality must be checked, the transmission of contaminated substances should be prevented and the protection of minors must be guaranteed.

The German Cannabis Association spoke of a “big hit”. “Many countries will follow suit and will also legalize cannabis,” said DHV spokesman Georg Wurth. Cannabis is now fully legal in Canada and Uruguay, as well as in several US states. Medical marijuana has been available in Germany by prescription since 2017.

Praise and criticism from business

In addition, there was a lot of applause and little criticism of the coalition agreement from business. In essence, the traffic light coalition lists the right tasks, but at the same time presents only “few concrete proposals for solutions,” explained Siegfried Russwurm, president of the German Industry Federation (BDI). According to BDI, the coalition agreement contains too many unclear declarations of will. “Here’s the lion’s share of the work to be done.”

Peter Adrian, president of the Association of German Chambers of Commerce and Industry (DIHK), praised the coalition agreement as having a constructive spirit for the future. However, the agreement still brings with it a number of unknowns for business practice, such as the unclear question of financing many projects.

KfW should promote a startup culture

Above all, private capital must be mobilized to finance a green and social market economy. The Reconstruction Loan Corporation (KfW) is also likely to play a key role. “If necessary, additional capital should be added to it,” explains Clemens Fuest, president of the ifo Institute. “This way, investments can be financed on a large scale. However, these must be investments that generate financial returns that can be used to service KfW loans. “

The state-owned development bank KfW is expected to act more as an innovation and investment agency and as a co-venture capitalist. The traffic light coalition wants to promote startups of companies. “The goal is to be able to start operations within 24 hours,” says the coalition agreement. German start-up culture needs to be improved. “Germany should become the leading location for start-ups in Europe,” the traffic light coalition hopes.

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