What a day: Olaf Scholz is Chancellor of the Federal Republic of Germany. From now on the SPD, the Greens, and the FDP will be in charge of the German federal government and bear a lot of responsibility. They won’t get a 100-day grace period foreseeably – but ministers and departments don’t seem to be completely sorted out yet either. On the other hand, it is now clear who will be pulling the European and international strings for Scholz in the future: Jörg Kukies, until now State Secretary under Scholz in the Federal Ministry of Finance, once with Goldman Sachs and at least a well-known player in Brussels finance and Eurogroup policy.
The new government naturally also means shifts in competencies, which we will explain to you further in the coming days. In terms of digital policy, the distribution between the ministries has now been adopted in principle, but the details are still not finalized. However, some repercussions for the future positioning of Berlin and its interaction with Brussels can already be seen.
What is clearer is that the German government is flying. Today Foreign Minister Annalena Baerbock will make her inaugural visit to Paris and meet her counterpart Jean-Yves Le Drian. Then at midday, she will travel to Brussels to meet Charles Michel and Jens Stoltenberg. This is followed by what is probably her most difficult appointment: Friday morning, Polish Foreign Minister Zbigniew Rau awaits them in Warsaw. Just the first of many air miles in the fight against climate change and for world peace.
German Chancellor Olaf Scholz will also travel to Paris on Friday to meet President Emmanuel Macron. He will then go on to Brussels to meet Charles Michel and Ursula von der Leyen, and in the evening he also plans to confer with Jens Stoltenberg. Scholz is also planning a visit to Poland in the near future.
The Bundeswehr flight readiness unit flies at every CO2 price. But the price is currently just under €90, almost €30 higher than it was a month ago. Lukas Scheid has analyzed what this means for European climate protection targets and who the high prices actually affect.
At an event organized by CEP and Europe.Table last night, Nicola Beer was the guest. The FDP MEP expects nuclear energy and natural gas to be included in the taxonomy for green investments – and warns that the discussion has “gotten out of hand”.
Now Angela Merkel is no longer chancellor after 16 years; Gerhard Schröder ruled for seven years before her. Who else has experienced four chancellors with an electoral mandate, with the exception of Wolfgang Schäuble, who has been a member of the Bundestag since 1972? She never became quite so famous – unjustly, some think: Evelyne Gebhardt will leave the European Parliament in February after 28 years. Why – and why now? That’s what she told Jasmin Kohl.
Last summer, industries subject to the ETS paid prices of around €50 per ton of CO2 emitted for their emission allowances – a previously unattained record. For years, the price bobbed around at less than €10 before it began to gradually rise at the beginning of 2018. Forecasts at the time assumed that prices would continue to rise, to around €80 by 2030. However, this value was already reached last Monday, with no prospect of the trend coming to an end. In the course of Wednesday, the curve even went beyond €90 and settled at €88.88 euros by the end of the trading day.
Michael Bloss, climate policy spokesman for the Greens in the EU Parliament and shadow rapporteur for the ETS reform, expects the price to rise to €100 by the end of the year. For him, this is a good sign: “We need high CO2 prices for the prevention of climate change”. He also sees one reason for the increase in the new German government. It is now clear, he says, that there is support for an ambitious Green Deal. The current prices are therefore an “anticipation of what will come after the ETS reform”, says Bloss.
The EU Commission plans to expand the ETS to include buildings and transport and to reduce the number of free allocations of emission allowances more quickly. Unused certificates could also disappear from the market after a period of time. A shortage of emission rights naturally raises the price. However, it is far from clear what the reform will ultimately look like and when it will come into force. The Commission’s proposal is currently still being debated in the committees of the EU Parliament.
However, the regulatory framework of the ETS, and this is already foreseeable, will not become looser, but stricter, says Henrik Maatsch, climate protection and energy policy officer at the environmental protection organization WWF. Maatsch sees the reasons for the higher demand also in the results of the climate conference COP26 in Glasgow: the clear commitment to the 1.5-degree target, the foreseeable end of global coal-fired power generation, and the announced prevention of methane emissions. This has resulted in a trend in the market, says Maatsch.
The current price increase is therefore due to the increased demand from industries subject to the ETS, which are stocking up on certificates as a precautionary measure, and has less to do with actual demand. For Michael Bloss, this is a sign that the market is not yet functioning properly: “We still have too large a supply of CO2 certificates for them to be used,” he complains. This is because the hedging of certificates leads to an immense gap between purchased and redeemed emission rights. In 2020, according to the EU Commission, this gap was over 460 megatons of CO2 that should have been emitted but were not.
In addition, speculators are betting on rising prices and buying these unredeemed emission certificates in order to sell them at a later date – when prices are even higher – at a profit. Some of these speculators are energy suppliers themselves. In September, it became known that RWE has enough certificates to supply itself until 2030.
However, it is considered more likely that they will not redeem them themselves but sell them. In order to increase the profit margin from the hedged certificates when they are sold – and this is what environmentalists are hoping for – the energy suppliers could increasingly rely on renewable energies and reduce fossil energy sources, for which they would, in turn, have to buy expensive certificates.
It is “absolutely standard” for energy companies to hedge in order to minimize risks, emphasizes WWF energy policy expert Maatsch. It would even be negligent not to do so. Otherwise, price fluctuations would primarily affect those companies that do not minimize risk, explains Maatsch.
Andreas Renner, Head of Politics, Economy, and Society at EnBW, explains that the company does not want to rest on hedged certificates in order to continue working with fossil fuels. Because depending on what you produce with, you get to feel the high CO₂ prices. This makes the long-term lower price of renewables even more attractive. Renner, therefore, welcomes the path of accelerated expansion taken by the new government coalition and hopes above all for faster approval procedures for renewable projects.
While the energy sector is benefiting from rising CO₂ prices, the manufacturing industry is more worried: “Every company with industrial plants in the EU that are subject to the ETS is clearly feeling the high prices for the purchase of certificates,” says Carsten Rolle, Head of Department for Energy and Climate Policy at the Federation of German Industries (BDI). Although some manufacturing companies had “hedged against the risk of sharply rising CO₂ prices in the long term until 2030 by means of trading agreements”, other companies would be hit hard by the high prices. “They will be looking for measures and strategies to mitigate the impact of rising prices now at the latest,” Rolle told Europe.Table.
Michael Bloss does not accept this. He points to the free allocations for industry. “They don’t even pay these prices, they get the certificates for free. He even sees this as a state subsidy, which is all the greater the higher the CO₂ price. In the upcoming ETS reform, he is therefore advocating a faster reduction of the free certificates for industry.
Carsten Rolle, on the other hand, sees it as an important protection against carbon leakage. The planned tightening of the rules for free allocation is absolutely counterproductive, he says: “It is an important mechanism against distortions of competition due to less stringent climate regulations in other parts of the world.” He calls for the free allocations not to be subject to additional conditions. That they will be reduced, however, is considered a foregone conclusion. The only question now is how quickly they will be replaced by the border adjustment mechanism CBAM.
The traffic light coalition brings with it significant changes for the organization of digital policy in the federal government. The future Federal Ministry for Economic Affairs and Climate (BMWK) will hand over competencies for the digital sector to the future Federal Ministry for Digital Affairs and Transport (BMDV).
As a civil servant State Secretary in the BMDV, Stefan Schnorr will in the future be responsible for significant parts of digital policy under Minister Volker Wissing. The former head of Department VI Digital and Innovation Policy at the BMWi is himself a member of the FDP. But his career has also been promoted by other parties: in April 2015, he became Head of Department for Digital Affairs under SPD Economics Minister Sigmar Gabriel, and also served there under his successors Brigitte Zypries (SPD) and Peter Altmaier (CDU). In Brussels, he is valued by interlocutors for his expertise.
Parts of Department VI are to move with Schnorr. This could also mean a change in responsibility for major European digital projects. According to the Federal Chancellor’s organizational decree, the responsibilities for “national, European and international digital policy” and for telecommunications will be assigned to the BMDV in the future and would thus significantly upgrade the small digital area. Whether the initial designation of digital ahead of transport is thus justified depends, among other things, on the exact design.
Formally, the decree – minus the postal competence – mainly describes the sub-departments A and B of the former Department VI of the BMWi. Meanwhile, it remains unclear whether Department VI A3, which is responsible for Telemedia (content providers), will also be transferred to the BMDV.
In the previous BMVI, only two sub-departments were responsible for digital policy:
Overall, there is likely to remain a lot of work to be done in coordination. The responsibility for AI and data policy, to which the FDP was particularly committed in the coalition negotiations, will remain in the BMWK. In addition, the competencies guaranteed to remain in the BMWK include regulatory and competition policy. In return, one competence will also move from the BMDV to the BMWi: the games industry. Robert Habeck should thus also award the computer games prize.
Consumer protection policy will have a much stronger say in digital policy plans. With the change of government, it will be removed from the Federal Ministry of Justice and added to the Federal Ministry for the Environment under the Greens’ Steffi Lemke. Since the area of consumer protection was already considered relatively independent in the past, hardly any problems are to be expected from the separation from the old house.
However, the area of consumer protection additionally receives responsibility for general and specific product safety from the Ministry of Agriculture. This can also play an essential role in AI regulation and has recently played no role politically in the BMEL. The Consumer Information Act, which would have to be modernized in terms of data use and provision, also goes to the department.
The new Consumer State Secretary Christiane Rohleder, most recently State Secretary in the traffic light coalition in the Rhineland-Palatinate, is also at home in digital issues: In the then BMELV she worked in Department 212 – Information Society, Transport, Future, responsible, among other things, for the first political confrontations with Facebook under Ilse Aigner.
With the V-domain being carved out of the previous BMJV, the future of the Network Enforcement Act (NetzDG) in the BMJ under FDP politician Marco Buschmann is likely to become exciting. The as-yet unresolved relationship with the requirements that the DSA will bring could bring BMJ, BMUV, BMWK, and BMDV some need for coordination.
The build-up of competencies for digital policy in the Federal Chancellery has come to an end with the new federal government.
Group 6.2 for digital policy, which is headed by Eva Christiansen, a long-time Merkel confidant, will probably not have an independent future; the responsibilities for operational activities are to move to the BMVD. In principle, the Chancellery’s organizational decree also stipulates that “European and international references as well as the corresponding higher-level and cross-cutting areas such as, in particular, policy and planning matters” should be included.
It is still unclear whether the basic digital policy units in the Federal Chancellery will remain there, be attached to other departments, or be distributed to the ministries. A smaller part of IT planning is to move back to the BMI. The coalition partners had already made it clear at the beginning of their negotiations that there would no longer be a Minister of State for Digitalization.
While in the White House and in the EU Commission, digital topics are increasingly determining the international summits of the heads of government as geopolitical topics, Germany’s central government is structurally scaling back here in the 20th legislative period – a few weeks before its own G7 presidency. Its future sherpa, Jörg Kukies, until now State Secretary in the Federal Ministry of Finance, will otherwise have an astonishing amount of power as head of the department in the Chancellor’s Office when it comes to other key political issues.
So will the Federal Foreign Office and the ministries actually pursue an active digital foreign policy in the future, as envisaged in the coalition agreement? And will they be able to count on the Chancellor as their international representative, who, apart from tax policy, is not known to be more interested in digital policy? For the time being at least, the German government’s digital policy realignment is still generating a lot of unanswered questions.
What a day: Olaf Scholz is Chancellor of the Federal Republic of Germany. From now on the SPD, the Greens, and the FDP will be in charge of the German federal government and bear a lot of responsibility. They won’t get a 100-day grace period foreseeably – but ministers and departments don’t seem to be completely sorted out yet either. On the other hand, it is now clear who will be pulling the European and international strings for Scholz in the future: Jörg Kukies, until now State Secretary under Scholz in the Federal Ministry of Finance, once with Goldman Sachs and at least a well-known player in Brussels finance and Eurogroup policy.
The new government naturally also means shifts in competencies, which we will explain to you further in the coming days. In terms of digital policy, the distribution between the ministries has now been adopted in principle, but the details are still not finalized. However, some repercussions for the future positioning of Berlin and its interaction with Brussels can already be seen.
What is clearer is that the German government is flying. Today Foreign Minister Annalena Baerbock will make her inaugural visit to Paris and meet her counterpart Jean-Yves Le Drian. Then at midday, she will travel to Brussels to meet Charles Michel and Jens Stoltenberg. This is followed by what is probably her most difficult appointment: Friday morning, Polish Foreign Minister Zbigniew Rau awaits them in Warsaw. Just the first of many air miles in the fight against climate change and for world peace.
German Chancellor Olaf Scholz will also travel to Paris on Friday to meet President Emmanuel Macron. He will then go on to Brussels to meet Charles Michel and Ursula von der Leyen, and in the evening he also plans to confer with Jens Stoltenberg. Scholz is also planning a visit to Poland in the near future.
The Bundeswehr flight readiness unit flies at every CO2 price. But the price is currently just under €90, almost €30 higher than it was a month ago. Lukas Scheid has analyzed what this means for European climate protection targets and who the high prices actually affect.
At an event organized by CEP and Europe.Table last night, Nicola Beer was the guest. The FDP MEP expects nuclear energy and natural gas to be included in the taxonomy for green investments – and warns that the discussion has “gotten out of hand”.
Now Angela Merkel is no longer chancellor after 16 years; Gerhard Schröder ruled for seven years before her. Who else has experienced four chancellors with an electoral mandate, with the exception of Wolfgang Schäuble, who has been a member of the Bundestag since 1972? She never became quite so famous – unjustly, some think: Evelyne Gebhardt will leave the European Parliament in February after 28 years. Why – and why now? That’s what she told Jasmin Kohl.
Last summer, industries subject to the ETS paid prices of around €50 per ton of CO2 emitted for their emission allowances – a previously unattained record. For years, the price bobbed around at less than €10 before it began to gradually rise at the beginning of 2018. Forecasts at the time assumed that prices would continue to rise, to around €80 by 2030. However, this value was already reached last Monday, with no prospect of the trend coming to an end. In the course of Wednesday, the curve even went beyond €90 and settled at €88.88 euros by the end of the trading day.
Michael Bloss, climate policy spokesman for the Greens in the EU Parliament and shadow rapporteur for the ETS reform, expects the price to rise to €100 by the end of the year. For him, this is a good sign: “We need high CO2 prices for the prevention of climate change”. He also sees one reason for the increase in the new German government. It is now clear, he says, that there is support for an ambitious Green Deal. The current prices are therefore an “anticipation of what will come after the ETS reform”, says Bloss.
The EU Commission plans to expand the ETS to include buildings and transport and to reduce the number of free allocations of emission allowances more quickly. Unused certificates could also disappear from the market after a period of time. A shortage of emission rights naturally raises the price. However, it is far from clear what the reform will ultimately look like and when it will come into force. The Commission’s proposal is currently still being debated in the committees of the EU Parliament.
However, the regulatory framework of the ETS, and this is already foreseeable, will not become looser, but stricter, says Henrik Maatsch, climate protection and energy policy officer at the environmental protection organization WWF. Maatsch sees the reasons for the higher demand also in the results of the climate conference COP26 in Glasgow: the clear commitment to the 1.5-degree target, the foreseeable end of global coal-fired power generation, and the announced prevention of methane emissions. This has resulted in a trend in the market, says Maatsch.
The current price increase is therefore due to the increased demand from industries subject to the ETS, which are stocking up on certificates as a precautionary measure, and has less to do with actual demand. For Michael Bloss, this is a sign that the market is not yet functioning properly: “We still have too large a supply of CO2 certificates for them to be used,” he complains. This is because the hedging of certificates leads to an immense gap between purchased and redeemed emission rights. In 2020, according to the EU Commission, this gap was over 460 megatons of CO2 that should have been emitted but were not.
In addition, speculators are betting on rising prices and buying these unredeemed emission certificates in order to sell them at a later date – when prices are even higher – at a profit. Some of these speculators are energy suppliers themselves. In September, it became known that RWE has enough certificates to supply itself until 2030.
However, it is considered more likely that they will not redeem them themselves but sell them. In order to increase the profit margin from the hedged certificates when they are sold – and this is what environmentalists are hoping for – the energy suppliers could increasingly rely on renewable energies and reduce fossil energy sources, for which they would, in turn, have to buy expensive certificates.
It is “absolutely standard” for energy companies to hedge in order to minimize risks, emphasizes WWF energy policy expert Maatsch. It would even be negligent not to do so. Otherwise, price fluctuations would primarily affect those companies that do not minimize risk, explains Maatsch.
Andreas Renner, Head of Politics, Economy, and Society at EnBW, explains that the company does not want to rest on hedged certificates in order to continue working with fossil fuels. Because depending on what you produce with, you get to feel the high CO₂ prices. This makes the long-term lower price of renewables even more attractive. Renner, therefore, welcomes the path of accelerated expansion taken by the new government coalition and hopes above all for faster approval procedures for renewable projects.
While the energy sector is benefiting from rising CO₂ prices, the manufacturing industry is more worried: “Every company with industrial plants in the EU that are subject to the ETS is clearly feeling the high prices for the purchase of certificates,” says Carsten Rolle, Head of Department for Energy and Climate Policy at the Federation of German Industries (BDI). Although some manufacturing companies had “hedged against the risk of sharply rising CO₂ prices in the long term until 2030 by means of trading agreements”, other companies would be hit hard by the high prices. “They will be looking for measures and strategies to mitigate the impact of rising prices now at the latest,” Rolle told Europe.Table.
Michael Bloss does not accept this. He points to the free allocations for industry. “They don’t even pay these prices, they get the certificates for free. He even sees this as a state subsidy, which is all the greater the higher the CO₂ price. In the upcoming ETS reform, he is therefore advocating a faster reduction of the free certificates for industry.
Carsten Rolle, on the other hand, sees it as an important protection against carbon leakage. The planned tightening of the rules for free allocation is absolutely counterproductive, he says: “It is an important mechanism against distortions of competition due to less stringent climate regulations in other parts of the world.” He calls for the free allocations not to be subject to additional conditions. That they will be reduced, however, is considered a foregone conclusion. The only question now is how quickly they will be replaced by the border adjustment mechanism CBAM.
The traffic light coalition brings with it significant changes for the organization of digital policy in the federal government. The future Federal Ministry for Economic Affairs and Climate (BMWK) will hand over competencies for the digital sector to the future Federal Ministry for Digital Affairs and Transport (BMDV).
As a civil servant State Secretary in the BMDV, Stefan Schnorr will in the future be responsible for significant parts of digital policy under Minister Volker Wissing. The former head of Department VI Digital and Innovation Policy at the BMWi is himself a member of the FDP. But his career has also been promoted by other parties: in April 2015, he became Head of Department for Digital Affairs under SPD Economics Minister Sigmar Gabriel, and also served there under his successors Brigitte Zypries (SPD) and Peter Altmaier (CDU). In Brussels, he is valued by interlocutors for his expertise.
Parts of Department VI are to move with Schnorr. This could also mean a change in responsibility for major European digital projects. According to the Federal Chancellor’s organizational decree, the responsibilities for “national, European and international digital policy” and for telecommunications will be assigned to the BMDV in the future and would thus significantly upgrade the small digital area. Whether the initial designation of digital ahead of transport is thus justified depends, among other things, on the exact design.
Formally, the decree – minus the postal competence – mainly describes the sub-departments A and B of the former Department VI of the BMWi. Meanwhile, it remains unclear whether Department VI A3, which is responsible for Telemedia (content providers), will also be transferred to the BMDV.
In the previous BMVI, only two sub-departments were responsible for digital policy:
Overall, there is likely to remain a lot of work to be done in coordination. The responsibility for AI and data policy, to which the FDP was particularly committed in the coalition negotiations, will remain in the BMWK. In addition, the competencies guaranteed to remain in the BMWK include regulatory and competition policy. In return, one competence will also move from the BMDV to the BMWi: the games industry. Robert Habeck should thus also award the computer games prize.
Consumer protection policy will have a much stronger say in digital policy plans. With the change of government, it will be removed from the Federal Ministry of Justice and added to the Federal Ministry for the Environment under the Greens’ Steffi Lemke. Since the area of consumer protection was already considered relatively independent in the past, hardly any problems are to be expected from the separation from the old house.
However, the area of consumer protection additionally receives responsibility for general and specific product safety from the Ministry of Agriculture. This can also play an essential role in AI regulation and has recently played no role politically in the BMEL. The Consumer Information Act, which would have to be modernized in terms of data use and provision, also goes to the department.
The new Consumer State Secretary Christiane Rohleder, most recently State Secretary in the traffic light coalition in the Rhineland-Palatinate, is also at home in digital issues: In the then BMELV she worked in Department 212 – Information Society, Transport, Future, responsible, among other things, for the first political confrontations with Facebook under Ilse Aigner.
With the V-domain being carved out of the previous BMJV, the future of the Network Enforcement Act (NetzDG) in the BMJ under FDP politician Marco Buschmann is likely to become exciting. The as-yet unresolved relationship with the requirements that the DSA will bring could bring BMJ, BMUV, BMWK, and BMDV some need for coordination.
The build-up of competencies for digital policy in the Federal Chancellery has come to an end with the new federal government.
Group 6.2 for digital policy, which is headed by Eva Christiansen, a long-time Merkel confidant, will probably not have an independent future; the responsibilities for operational activities are to move to the BMVD. In principle, the Chancellery’s organizational decree also stipulates that “European and international references as well as the corresponding higher-level and cross-cutting areas such as, in particular, policy and planning matters” should be included.
It is still unclear whether the basic digital policy units in the Federal Chancellery will remain there, be attached to other departments, or be distributed to the ministries. A smaller part of IT planning is to move back to the BMI. The coalition partners had already made it clear at the beginning of their negotiations that there would no longer be a Minister of State for Digitalization.
While in the White House and in the EU Commission, digital topics are increasingly determining the international summits of the heads of government as geopolitical topics, Germany’s central government is structurally scaling back here in the 20th legislative period – a few weeks before its own G7 presidency. Its future sherpa, Jörg Kukies, until now State Secretary in the Federal Ministry of Finance, will otherwise have an astonishing amount of power as head of the department in the Chancellor’s Office when it comes to other key political issues.
So will the Federal Foreign Office and the ministries actually pursue an active digital foreign policy in the future, as envisaged in the coalition agreement? And will they be able to count on the Chancellor as their international representative, who, apart from tax policy, is not known to be more interested in digital policy? For the time being at least, the German government’s digital policy realignment is still generating a lot of unanswered questions.
