Germany’s sobering lesson for Albanese on climate ambitions

Berlin: If Anthony Albanese had plans to ratchet up Australia’s climate ambitions over coming months, his German counterpart could provide him with a cautionary tale.

The Australian prime minister is expected to sign up to the so-called high-powered “climate club” at German chancellor Olaf Scholz’s invitation during a visit to Berlin on Monday, but the unfortunate truth for progressive leaders is that populist politics is alive and kicking when it comes to efforts to decarbonise economies.

In scenes all too familiar to Australian political watchers over the past decade, Scholz’s three-party coalition has been beset by infighting this year over what was, by German’s standards, a rather radical piece of climate legislation, dubbed the “heat hammer” by the popular press.

Led by the Greens – a key part of Scholz’s coalition – the bill in effect proposed a ban on new gas and oil boilers from January 1 next year. Newly installed heating systems would have to be at least 65 per cent powered by renewables.

But it appeared even Germans had their limits around the imposts of climate policies on their hip pockets, as the plan collapsed and was then drastically watered down, with voters worried about the enormous cost of switching from gas or oil-fired boilers to heat pumps, and the tight deadlines the bill imposes.

Installing heat pumps is usually at least twice as expensive as conventional heating systems, often costing more than €20,000 ($32,774).

German officials argued the cost of running fossil fuel-based systems would rise substantially in years to come as the EU’s emissions trading scheme is extended to buildings and people have to pay for the greenhouse gases emitted by their homes.

Last week, as Scholz prepared to ram though a compromise plan, the Federal Constitutional Court ruled the legislation had been through so many last-minute changes that MPs needed more time to review it. Parliament will vote in September at the earliest, but many fear the delay will be a death sentence for the bill.

Controversy over the bill has plunged Scholz’s government into its worst crisis since taking office nearly 18 months ago. The disquiet hit the government in the opinion polls and has been particularly reflected in a massive slump in the Greens’ approval ratings, which have now fallen behind the far-right Alternative for Germany.

In June, support for the far-right party rose to 17-19 per cent, in joint second place with Scholz’s Social Democrats, as it tapped into worries about cost of living, the effect of the green transition on power bills, and a new surge in migration.

Fossil fuels are used to heat about 75 per cent of Germany’s housing stock and about 40 per cent of all boilers are more than 20 years old. After years of neglect, there was a consensus that the way buildings are heated must change to reduce the emissions, which are directly responsible for about 15 per cent of the country’s carbon output.

The proposed ban led to a series of unintended consequences. Thousands of Germans sought to beat it by installing new gas boilers before the January 1 deadline, locking in carbon emissions for decades to come.

While the Germans have talked a big game for a long time when it comes to climate, their actions have not produced the results to match the rhetoric. The nation has missed its climate targets in the past two years and it had to reopen mothballed coal-fired plants last year as the gas crisis caused by the war in Ukraine struck.

Now even the government acknowledges that achieving the next big climate milestone – a reduction of emissions by 65 per cent in 2030 compared with 1990 levels – will be a major challenge. Home to many energy-intensive industries, Germany aims to cut its emissions to net zero by 2045.

Worse now for Scholz is that his country – for so long the economic powerhouse of mainland Europe – was the only member of the Group of 20 industrial and developing nations aside from Russia to show a lower gross domestic product in the first three months of 2023 than a year earlier.

Germany’s GDP shrank by 0.5 per cent – while in the United States, GDP was 1.6 per cent larger – and its weakness was one of the factors that tipped the eurozone into a recession at the start of this year.

Promising to act on climate change is the easy bit. Doing it at a time of economic peril is another matter altogether.

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