German Economy Will Collapse Before Achieving “Climate Neutrality”

The game-changing march into the era of “climate neutrality by 2045”, for which German Chancellor Olaf Scholz sought global support, has not been successful, to say the least. In addition to being un-implementable and unaffordable for industry and private households, the “renewables only” approach was delivered a blow by the German Constitutional Court, which ruled unconstitutional €60 billion of the €216 billion of the special climate fund KTF (cf. SAS 47/23). Faced with uncertainty over the funding of a large part of its over-ambitious climate protection policy, the government is now attempting to transfer to the KTF the money allocated to other budget items —but has ruled out cuts in the military spending. The focus on harsher austerity in the social, labor and pension budgets, for which FDP Finance Minister Christian Lindner sees “no alternative”, and which Green Economy Minister Robert Habeck calls “unavoidable”, aims at securing support for the climate policy from the CDU, which is threatening to go before the Court again, should the government suspend the debt ceiling and take on extra new loans.

Could such a scenario work? It’s doubtful. A new austerity drive may be applauded by the Christian Democrats, the Free Democrats (FDP) and the Greens (the latter two belonging to the ruling coalition), but not by the Social Democrats, where an internal rebellion is brewing against excessive “green” plans as well as weapons deliveries to Ukraine. In Hesse, the SPD decided to join a coalition with the CDU, at the expense of the Greens, and in the city of Hanover, the party abruptly walked out of its coalition with the Greens due to radical “environmental” demands.

In the FDP as well, a mobilization is growing among the party base to demand a referendum on pulling out of the coalition government in Berlin. Add to that the legal problems that would arise for the government from a new challenge to the budget policy. All in all, Germany is on the path to ungovernability, which may lead – sooner rather than later — to early elections. Failing a change in policy from the renewables illusion, the collapse of German industry will occur long before 2045, proclaimed by Chancellor Scholz the year in which Germany will become “completely climate-neutral”.

Meanwhile, at the COP28 in Dubai, the German delegation led by the undiplomatic Annalena Baerbock is trying to convince other countries to follow Germany’ lead in opting for “renewables only” and exiting from nuclear energy, but is already considered a laughing stock by most.