Germany’s six-month presidency of the EU Council of Ministers, which starts in July, offers a great opportunity for Berlin to show leadership by supporting the implementation of the Commission’s European Green Deal agenda, write Felix Heilmann and Alexander Reitzenstein.
Felix Heilmann is a researcher at the Berlin office of E3G, a climate think-tank. Alexander Reitzenstein is policy advisor at E3G’s, Berlin office.
European decision-makers can learn many lessons from Germany’s economic success over the past decades. Perhaps the most important of these lessons is that it is no longer relevant to question whether the status quo should change – changes are already happening and will wait for no one.
Ahead of its Presidency of the European Council, it is high time for Germany to internalise this insight, and project it externally.
Mega-trends such as climate change and digitalisation are disrupting traditional foundations of stability and prosperity. These simultaneous and disruptive trends are making structural changes inevitable.
If policymakers want to reap the benefits of change and ensure climate safety for all they must start focussing on shaping the future transition. For Germany, this means it must take a more active and responsible role on the international stage, anchoring climate diplomacy as a cross-cutting priority of its foreign policy.
The country’s Council Presidency later this year offers a great opportunity to show leadership by supporting the implementation of the Commission’s European Green Deal agenda.
The Presidency can also be used to spark more international climate ambition, for example by playing a proactive role as a climate ambition broker during the EU-China Summit in Leipzig.
For this to succeed, an understanding of today’s environment is needed. Germany’s prosperity, from the post-war “Wirtschaftswunder” to the development of its world-leading export economy, was shaped by a political philosophy of incremental change and consensus-seeking.
The German approach aimed at preserving the status quo to the extent possible. It was enabled by a favourable external environment, for example a liberal, US-dominated international order.
But at the beginning of this new decade, the situation is fundamentally changed: digitalisation is revolutionising traditionally strong industries, nationalist governments are undermining multilateralism and free trade, and the increasingly dramatic impacts of climate change are affecting almost all policy areas.
In such a radically changing world, slow action, or even inaction, is a guarantee for losing control.
For example, small and medium-sized enterprises in Germany, the famed “Mittelstand”, are lagging behind in their use of digital technologies, losing out to larger competitors and peers from abroad.
The German car industry is struggling to catch up with the global transition to electric cars. The announcement of the first Tesla factory in the country presents another alarming signal for the industry.
Changes on the international stage are just as disruptive: traditional supporters of multilateralism such as the United States are retreating behind border walls, and the geopolitical climate is getting worse.
All this means that Germany must begin actively influencing global rules in defence of its own interests and values. The domestic economic situation is another cause for worry: although a recession was avoided in 2019, thousands of jobs in future-proof industries such as wind power were lost.
The climate crisis is closely linked to all these shifts. The connections between climate change and other disruptive trends however, are still largely ignored. When it comes to the domestic implementation of climate policy, Germany, despite its generally positive international reputation, has ceased to be a pioneer.
There are many reasons for the stagnation of German climate efforts, including the stalled expansion of renewable energies, the delayed coal phase-out, and the lack of a comprehensive strategy for greening the country’s industry. Various studies, including from the German Industry Association BDI, have shown that climate policy can strengthen competitiveness and growth.
Despite these insights, climate action is still not properly translated into policy change.
These studies also show the sensible question to ask with regards to climate policy is not “whether” but “how”. How can economic competitiveness and social cohesion be secured in the transition to a climate-neutral economy?
What political choices can ensure Germany benefits from the global transition to electric mobility, green industrial processes and 100% renewable energy systems, while also guaranteeing a just transition for those affected by these changes?
With all these challenges, change is the only option. The world is moving, and it will not wait for Germany – or any other country.
The good news: decision-makers can still change course. But securing future prosperity requires decisive action across policy areas now. In a new E3G study, we analyse the trends described above and propose several measures to kick-start the necessary change.
We place an emphasis on the need to think across sectors and trends when shaping upcoming transformations, especially with regards to digitalisation and the transition to climate neutrality. But doing so also requires political and institutional innovation at home.
We suggest government leaders oversee strategic climate politics, supported by a Climate Ministry which is in charge of implementation in key sectors. In addition, experts from all relevant ministries should meet regularly to develop coherent solutions across policy areas covering disruption and transformation.
Such measures include a strategy to structurally involve the financial system in climate solutions, an investment strategy to support sectoral transformations and social policy measures for a just transition.
The challenges facing the globe now are immense. But history shows the ability of liberal democracies to overcome such challenges is immense, too. This lesson is true for decision-makers far beyond Germany’s borders: if you want to defend the status quo in the future, decisive action is needed now.