Germany's ministers and legislators, like most of their counterparts across the European Union, have departed for the summer break of 2024. There are exceptions, however: elections will be held in three eastern German federal states in September, and the campaigns are already in full swing. Polls point to strong results ahead for two populist parties – the far-right AfD, which rejects action on climate change, and the left-nationalist BSW, which supports a return to trading in resources with Russia.

The state elections are an important political turning point on the road to the German Bundestag elections due in the autumn of 2025, which will set the climate, industrial and energy policy of Europe's largest economy for years to come.

Issues worth watching in the weeks ahead

• Elections in the eastern German federal states – the current political leaders of Thuringia, Saxony and Brandenburg are worried about another possible major win for the far-right AfD, as well as for the nationalist left forces in the September elections. In the recent European Parliament elections, the AfD became the party with the greatest support in every eastern German federal state, with the exception of the city of Berlin. In many of the federal states, the left-nationalist BSW managed to overtake the federal government parties – Chancellor O. Scholz's SPD, the Greens and the FDP. Both populist parties are calling for a return to large-scale trade in energy resources with Russia. Polls indicate that the most important topics for German voters are migration, education, social justice and the economy, while climate issues are of minor significance.

• Gas-fired power stations – the German government has released further details of its long-awaited power station strategy. During periods with little wind or sun, the country will need reserve capacity to secure its electricity supply. To that end, the government has decided to help finance the construction of 10 gigawatts (GW) of new gas-fired power stations, half of which are later to be converted to run on hydrogen and decarbonise energy supply. At the end of 2024, or more likely in early 2025, the state will hold the first tenders. As reported previously, the German government plans to introduce an electricity price levy to help fund support for these power stations. In addition, by 2028 Germany plans to introduce a so-called capacity market, in order to secure energy supply. A document setting out the options for this market is currently being drawn up.

• The energy market research group AGEB plans to publish energy consumption figures for the first half of 2024 shortly. Electricity data is already available to us, but the AGEB data set will cover energy consumption across all sectors – from oil to coal and renewables.

The latest from Germany – a round-up of last month

• The 2025 federal budget approved – after weeks of difficult negotiations and an agreement that the three coalition partners reached in early July, the government has finally adopted the draft 2025 federal budget. Researchers at the non-partisan think tank Dezernat Zukunft pointed out that, in order to prepare the draft budget, the government relied on “budgetary techniques and optimism”, including significant spending cuts in some areas, such as social welfare benefits. The draft left open questions about the future of the Climate and Transformation Fund – Germany's main state budget instrument for financing climate policy – in which, following a constitutional court ruling, there is a “large hole” of billions of euros. The coalition government was thus forced to take hard decisions about spending priorities. In the researchers' view, this means the next government will once again have to shore up funding for climate policy.

• Hydrogen imports – at the last significant cabinet meeting before the summer break, the government agreed on a long-awaited import strategy for green hydrogen produced from renewable electricity. This fuel will be needed in future to run the power stations mentioned above, but most likely even more so to carry out certain industrial processes that are not easy to electrify. The government announced that at least 50-70% of hydrogen will have to be imported in future, as Germany's renewable energy resources are limited.

• Renewables records – in the first half of 2024, renewable electricity generation reached record levels across Europe and in Germany. From January to the end of June, renewables supplied roughly 57% of Germany's gross electricity consumption, according to figures from the Federal Environment Agency (UBA). The grid agency BNetzA announced the winners of the latest auction for the right to build offshore wind farms in the North Sea, in which investors offered to pay three billion euros for a combined capacity of 2.5 GW. Even so, industry representatives believe that the country will not be able to meet its targets in this area by 2030.

• Bogus climate projects – the government has to address allegations of fraudulent emissions reduction projects in China that are used by fossil fuel giants such as Shell and TotalEnergies to meet climate protection requirements in Germany. The media have already reported that many of the projects are in fact fakes, putting pressure on the Environment Agency UBA, which approved them.

• The Supreme Court has ruled that companies in Germany will not be able to label their products as “climate-neutral” without adding a detailed explanation substantiating the claim. This is in line with EU plans to regulate such claims.

• Railway troubles – the UEFA Euro 2024 football tournament drew attention to obvious shortcomings in Germany's railway system. Considerable delays prompted passengers to complain on social media. The country is now beginning to consider carrying out major railway modernisation projects in the coming years. That, predictably, will cause even greater delays to train services.

Key events ahead

• Following the EU elections in June and the re-election of European Commission President Ursula von der Leyen (Ursula von der Leyen), close attention is being paid to how the German politician will assemble her team of commissioners in August and September and draw up the work programme for the years ahead. The first indications can be found in von der Leyen's https://commission.europa.eu/document/download/e6cd4328-673c-4e7a-8683-f63ffb2cf648_en. Vincent Hurkens (Vincent Hurkens) of the think tank E3G has prepared an assessment of them.