Conflict over Climate Protection Industry Prepares for Battle with Merkel

Germany's industry captains fear Angela Merkel's ambitious climate protection goals could cause job losses, damage the economy and lead to the flight of skilled workers to other countries. They argue the only way to achieve her goals is to increase the country's use of nuclear energy.

Critics say German Chancellor Angela Merkel is setting "unrealistic goals" with her climate protection plan.

Critics say German Chancellor Angela Merkel is setting "unrealistic goals" with her climate protection plan.

Angela Merkel is meeting Tuesday with CEOs of leading German industrial companies and business organizations to promote her government's ambitious climate protection plans. Industry captains, however, are warning that the chancellor's plan could lead to the loss of jobs and an exodus of skilled workers to other countries. They argue that the only conceivable way for Germany to even come close to achieving those goals is to extend the lifespan of its nuclear power plants, which are all slated for shutdown by 2021.

During her tenure as rotating president of the European Union, Merkel was able to secure a deal at the beginning of March with other member states to set binding reductions of carbon dioxide emissions to 30 percent of 1990 levels by 2020. Saying that Germany should set the example for other countries, Merkel has set the goal of cutting German emissions to 40 percent of previous levels.

Merkel obtained plaudits from her colleagues in Brussels for the achievement, but back at home she faces an uphill battle. Throughout her term as chancellor, Merkel has been routinely praised for her foreign policy successes, but the challenge she faces this week over her climate protection plan underscores her more limited clout in forging domestic policy.

Tuesday's summit will see Germany's economics, environment and research ministers coming together at the table with captains of industry, German utility companies and consumer advocacy groups. The issue is no less than how the world's third-biggest economy can balance its energy needs with the need to protect the climate and to answer the question of whether the Earth's atmosphere can be protected while at the same time fostering economic growth.

But industry representatives say the main measure for cutting emissions -- by increasing energy efficiency by 3 percent annually -- will be impossible to achieve without massive changes to current production conditions. Today, they say, it already requires significant effort to achieve increased energy efficiency of 0.9 percent.

"Anti-Energy Policies"

"Politicians are constantly setting new, unrealistic goals," Jürgen Hambrecht, the CEO of German multinational chemical giant BASF told SPIEGEL in an interview published last week. His misgivings are shared by other CEOs, including those of utility companies operating in Germany like E.on, RWE, EnBW and Vattenfall. "The government is lacking balance, reason and realism," E.on CEO Wulf Bernotat said. And, according to Vattenfall CEO Klaus Rauscher: "The energy policies of this government are anti-energy policies."

A paper from the Federation of Industries, an umbrella organization for German industry, went so far as to describe Merkel's plan as "creeping deindustrialization" -- a tough pill to swallow in a country where manufacturing is still the largest business sector.

For a chancellor whose party is sometimes accused of neo-liberalism, it has been a week of stinging criticism. For a long time, German industry had reserved critical comments about the chancellor. But in the runup to Tuesday's summit, they pulled off the kid gloves. Merkel, industry captains say, is creating a "horror scenario" in which the chancellor is jeopardizing Germany's competitive edge as a place to do business, as well as threatening jobs and the economy.

With diverging interests between political parties as well as industry, government sources said they did not expect any concrete decisions to be made at Tuesday's summit meeting.

A Nuclear Renaissance for Germany?

Without reversing a 1999 deal from former chancellor Gerhard Schröder's government to take the country's nuclear plants off the power grid, they argue, Merkel's plan would be impossible without considerable and potentially debilitating costs to industry. Greater energy efficiency and great use of renewable energies, they say, will not be enough to economically fill the energy void left in the absence of nuclear power.

Merkel, who was Germany's former environment minister under Helmut Kohl, is said to be sincere about her climate protection goals. At the same time, she doesn't want to be seen as an enemy of business. According to SPIEGEL sources, the chancellor is hoping to spark a renaissance in nuclear energy. That strategy is currently impossible -- the nuclear shutdown is inked in the coalition contract between the two parties in Merkel's government, the Christian Democrats and the Social Democrats -- but Merkel is said to be laying the foundations to make nuclear energy an issue in the 2009 federal elections.

A recent internal report at the chancellery concluded that nuclear energy offered the best path to achieving Merkel's climate protection goals. "If you consider prices, costs, CO2 and energy supply security, then the nuclear power scenario offers the best results," it concluded. Without nuclear energy, climate protection would only be achievable "at high costs."

A senior Merkel advisor told SPIEGEL the chancellor is seeking to improve public views about nuclear energy and to help transform its image into one that is environmentally friendly. Merkel is said to want to convince Germany's Social Democratic environment minister Sigmar Gabriel and the rest of his party to shift on nuclear energy. If not, she will likely make it a campaign issue and, ultimately, a legislative issue in a new government -- which could possibly take the form of a coalition with the conservative and business-friendly Free Democratic Party.



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