BERLIN – Two months into its tenure, Germany's new government is facing increasing scrutiny and concern from climate action proponents regarding the future trajectory of its energy policy. Activists and industry stakeholders alike are voicing apprehension that recent decisions and planned assessments could significantly impede the nation's ambitious energy transition, particularly the rollout of wind and solar capacities. This comes amidst broader criticism over the government's decision to deny households and small businesses a promised electricity tax cut, a move that has drawn widespread condemnation from consumer groups and trade associations.

A central point of contention is the economy ministry’s forthcoming "reality check" report, which is intended to assess the risks and costs associated with the transition to renewable energies. Climate policy advocates and the renewables industry fear this report, due in September, is designed to serve as a pretext for slowing the expansion of renewables. Economy Minister Katherina Reiche has already stated that renewable targets were "completely exaggerated," further fueling these concerns. Critics, including NGO Environmental Action Germany (DUH), argue that commissioning the report from the EWI institute, which has alleged ties to the fossil fuel industry, undermines the objectivity of the assessment. They emphasize that the core issue lies not in overambitious targets but in the government's perceived failure to accelerate the adoption of climate-friendly technologies like heat pumps and electric vehicles.

Adding to the apprehension, Germany's industrial decarbonization efforts have encountered significant setbacks. ArcelorMittal, the world's second-largest steelmaker, has abandoned plans to convert two German plants to climate-friendly production methods, citing high energy costs, and declined 1.3 billion euros in subsidies. This decision prompted Finance Minister Lars Klingbeil to call for a "steel summit." Concurrently, energy firm LEAG has indefinitely postponed plans for one of Europe’s largest green energy and hydrogen plants. While other green steel projects by Salzgitter, Thyssenkrupp, and SHS, totaling approximately 5.6 billion euros, are underway, these recent withdrawals underscore the formidable economic challenges in transitioning heavy industry.

Further policy debates are unfolding around the planned introduction of Europe’s new carbon trading system for building and transport, ETS 2, in 2027. Germany, alongside other EU member states, has urged the European Commission to modify its plans to prevent sharp price jumps that could lead to "significant negative social impacts." Social welfare and environmental organizations advocate for a fairer system, calling for a substantial increase in the EU’s Social Climate Fund to protect low-income groups. Environment Minister Carsten Schneider recently highlighted the "social question" as a critical battleground for climate policy. Meanwhile, the powerful German car industry association VDA has called for a de facto reversal of the EU’s 2035 ban on new combustion engine car sales, proposing a 90 percent emissions reduction target instead of zero, signaling a potential softening of climate ambitions in the transport sector.