The costs of net-zero climate policies continue to roil Western politics, and the latest evidence is the collapse last week of Chancellor Olaf Scholz’s coalition in Germany, paving the way for voting no later than March.
This brings to a head a bruising year-long fight about how to pay for net zero. The constitutional court ruled last year that the subsidies Berlin is using to sustain Germany’s industrial base amid higher energy prices must be funded on the government’s balance sheet rather than via off-balance-sheet borrowing. This means Berlin has to cover net-zero costs while staying within the constitution’s balanced-budget amendment.
Cue chaos, as no one could agree on how to fund climate policy once hiding the costs from taxpayers isn’t an option. A move to impose steeper fuel taxes on farmers sparked protests that clogged city streets with tractors. That tax hike was postponed.
Along the way voters keep delivering electoral rebukes to the governing parties in state elections over the economy, energy prices and immigration. Yet Berlin continues its forced march to net zero, including a costly build-out of renewable energy (after Mr. Scholz’s administration shut down nuclear power) and unpopular electric-vehicle mandates.
Germany is de-industrializing as manufacturers can’t cope with sky-high energy prices. A recent announcement that Volkswagen will lay off 10,000 workers and close three factories is the latest downsizing by Germany’s mainstay companies. Industrial production has fallen some 10% since its recent peak in February 2023, and it’s down nearly 20% from its 2017 prepandemic high.
Mr. Lindner finally said “enough.” His report proposes reverting to the European Union timetable for net zero by 2050 rather than Berlin’s accelerated schedule. He says Germany should resist EU-level carbon targets for specific industries such as construction or transport, and should pull the plug on renewable-energy subsidies. He wants Berlin to cut income and corporate taxes and regulatory red tape to revive industry. Those ideas are anathema to the Greens and SPD.
