Germany

The subtle redesign of Germany energy policy agreed by the government in Berlin last week sends some important signals not for the German market but for the rest of Europe. Far from damaging the renewables business the move could be the salvation of the sector. Other countries, the UK included would do well to adopt similar measures. This would be the most effective way of responding to the urgency expressed in the latest IPCC report. Read more

On Wednesday the cabinets of the France and Germany will hold a joint meeting in Paris. The occasion is highly symbolic – both in the way in which normal state-to-state relationships have replaced war in Europe, and in the continued commitment of the neighbours to maintain their alliance whatever their short-term political and personal differences. But the discussion this week could also produce substantive results.

President François Hollande, to the surprise of French business as well as his German visitors, has proposed that the two countries should work to achieve deep co-operation on energy policy. He compares this to the Airbus project which in his words “saved us from becoming a branch plant of the US economy”. The initial reaction to the idea in Berlin has been lukewarm. There is a general fear that Mr Hollande will do everything possible to get Germany to fund French debts. One German told me last week that Mr Hollande should “get on his scooter and stick to what he does best”.

That is a very shortsighted view. Energy policy is going wrong because we are accustomed to thinking within narrow national lines. Each individual country has to achieve whatever is the target of the moment – a 30 per cent cut in emissions; a 20 per cent share for renewables and so on. This is a suboptimal approach. Individual countries can achieve their targets but the costs of working in an atomistic way can be enormous. One of the greatest advances of a complex society is that different people do different things. We do not all grow or kill our own food every day. The case is best spelt out in Robert Wright’s brilliant book NonzeroRead more

The German election later this month might seem to be about to produce more of the same. On the eurozone currency crisis – as Quentin Peel wrote in the Financial Times a couple of weeks ago – the expectation of a big reform plan once Angela Merkel wins re-election has given way to the realisation that nothing much will change unless the markets force a radical response. Austerity and crisis management are the watchwords, and only a major event such as a collapse in the credibility of Italian debt repayment will force Germany to address the need for a full-scale resolution of the problem. That could involve the creation of a tighter EU core, or a reluctant acceptance that the euro as designed cannot work without a backstop funding mechanism in the form of Eurobonds. Nothing in the election campaign has provided a clue as to which of these alternatives will prevail.

Similarly on energy policy the election is beginning to look like a breakpoint which could have wide implications across Europe. But the direction of change remains uncertain and dangerously dependent on the precise make up of the next coalition government. Read more

If Samuel Beckett had made Godot a woman he would have called her Angela. That is the joke in Berlin where every policy is on hold and everyone – from the members of the Eurozone to the prospective nominees for the new European Commission – is waiting for Angela. And she in turn is waiting for the results of the election on September 22nd. Then and only then will we know the shape and balance of the next coalition Government. The result is a period of deep uncertainty, not least over energy policy which is frozen by indecision. Read more

Germany turns to renewables. Image by Getty

The future of the euro and the fate of Greece and Spain are not the only issues on which the key decisions are now taken in Berlin. As Gideon Rachman wrote the other day Berlin has taken its place as the centre of power in Europe, easily eclipsing Brussels.

On energy too, the policy choices made in the German Chancellery will shape what happens to the market across Europe and beyond. The only problem is that as in the case of the euro there is a marked reluctance in Berlin to take hard decisions. German politics work by consensus and reaching that consensus can take a long time. The result is that policy drifts and investment grinds to a halt. That is what is happening now. Read more