Germany, as the “engine” of the European Union in terms of influence, its enormous economy and political activity, is a very important country for Latvia too, so let us look at the latest news and the events expected there in the near future.
Although federal political activity in Germany will only resume in full on 8 September, politicians and observers have already begun work in the federal states, because in September three of them – in eastern Germany – will elect new parliaments. Given the convincing results of right-wing and left-wing populist parties in pre-election polls, Germany could for the first time since reunification find itself in an entirely new situation, which would increase uncertainty over German climate and energy transition policy as well.
Events expected in the coming weeks
Elections will be held in a series of eastern German federal states. Populist parties – namely the far-right Alternative for Germany (AfD) and the nationalist, left-wing Sahra Wagenknecht Alliance (BSW) – are expected to make major gains in the three former so-called “communist” federal states of Thuringia, Saxony and Brandenburg. Both parties criticise the federal government's energy and climate policy and call for a full resumption of fossil fuel trade with Russia (which, as is well known, has caused the war in Ukraine). Although the regional votes do not directly affect Chancellor Olaf Scholz's coalition government, their results could nevertheless have a strong impact at federal level as well. Germany's ambitious energy transition plans could face a severe test. The German government takes the view that the eastern federal states risk jeopardising their own future prosperity prospects.
Protection of critical infrastructure. Shortly after the summer break, the German government will discuss a draft law aimed at improving the protection of so-called critical infrastructure against mechanical (physical) damage. Energy sector companies (the 11 companies regarded as “critical infrastructure”) would have to draw up protection plans taking account of all possible risks, including natural disasters, human error and sabotage.
Electricity market reform. The German government aims to accelerate the decarbonisation of the electricity sector still further by carrying out a far-reaching market reform. In a document drawn up in early August setting out the areas of action, the Ministry for Economic Affairs (BMWK) presented possible changes to renewable energy support, new incentives for flexible electricity use, local pricing models and options for the structure of a so-called capacity market. By 2028 the capacity mechanism should create a business case for new, hydrogen-ready gas power plants, but it should also include decentralised elements such as storage facilities and flexible loads. In the coming weeks, discussion of these substantial changes will undoubtedly intensify.
The future of biomass. Biogas plants, which also run on production residues from forestry and agricultural processes, may in future have an important place in the German energy system. Economics Minister Robert Habeck (Robert Habeck) announced that a “comprehensive biomass package” with new funding opportunities for operators would shortly be submitted. The subsidy structure should make it possible for biomass to “take part” in the “capacity market”, so that it can supply electricity flexibly when it is needed (a change of direction in biomass subsidy policy to date), reports Tagesspiegel.
LNG. The controversial new liquefied natural gas (LNG) terminal on the Baltic Sea coast in northern Germany is ready for operation, but, according to media reports, there is no demand for its output. Environmental campaign groups have warned that the government's plans to replace Russian pipeline supplies with liquefied natural gas could be “too grandiose”. According to media reports, the first liquefied natural gas cargoes are not expected within the coming month.
News from Germany on last month's developments
The budget puzzle. The coalition government has reached a fresh agreement on the 2025 budget after advisers to the Ministry of Finance cast doubt on the draft agreement. The agreement was criticised because researchers described it as “optimistic assumptions without secure funding”. It will now be debated in parliament and is expected to be given the green light later this year.
The search for a nuclear waste disposal site is proceeding slowly. Following Germany's phase-out of nuclear power at the beginning of 2023, the search continues for a site where nuclear waste could be stored safely. A report commissioned by the country's Federal Office for the Safety of Nuclear Waste Management (BASE) found that, in ideal conditions, a decision on a site cannot be expected before 2074. The Ministry for the Environment stated, however, that the conclusions are out of date and that the work can be completed sooner. The original deadline (2031) for a decision on a storage site for high-level radioactive waste was scrapped two years ago.
Coal use is falling ever more rapidly. Coal-fired electricity generation in Germany is continuing to fall sharply. Warmer than usual weather and the economic downturn under way in the EU's largest economy reduced energy demand by more than three per cent in the first half of the year. Demand for hard coal and lignite fell by almost 20% from January to the end of June.
Problems for electric vehicles. Electric vehicles are becoming ever more popular and winning an ever larger market share worldwide, yet demand for them is currently low in Germany, the world's second largest producer of electric vehicles. Both the carmaker Volkswagen and the leading industry supplier ZF published figures that raise concerns that plans to scale up electromobility may be too unrealistic. Both companies are preparing to lay off staff at their plants, because the queues of buyers for electric vehicles are not as substantial as expected – partly because the government scrapped support schemes at the end of 2023 in response to the budget crisis. Industry expert Ferdinand Dudenhöffer (Ferdinand Dudenhöffer) estimates that political decisions have pushed the country's electromobility growth target back by at least five years.