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Carmakers, coal plants seen suffering if Greens join German coalition
September 25, 2017 / 10:49 AM / 2 months ago

Carmakers, coal plants seen suffering if Greens join German coalition

FRANKFURT (Reuters) - The emergence of the Greens as likely powerbrokers in a future German government coalition could spell bad news for the country’s car and coal power industries.

FILE PHOTO: Cars and trucks are stuck in a traffic jam near Irschenberg, Germany July 28, 2017. REUTERS/Michaela Rehle

Following Sunday’s general election, Chancellor Angela Merkel’s coalition partner, the Social Democrats (SPD), said it would go into opposition, meaning the Christian Democrats (CDU) may now seek a deal with the business-friendly Free Democrats and the pro-environment Greens.

Talks on such a coalition would be highly complex, but could see the Greens pressing their key policies on the energy and autos sectors, which are already grappling with Germany’s shift away from nuclear power and a diesel emissions scandal.

The Greens are calling for a ban on the sale of new combustion-engine cars from 2030 - a decade earlier than plans already outlined in France and Britain - to cut pollution levels as the sector moves toward electric vehicles.

They also want a quick phase-out of coal power plants - including lignite plants, the most polluting form of power, which account for 23 percent of Germany’s gross power production - and their complete closure by 2030.

Analysts say the Greens would be more likely to have an impact on the coal issue than on cars. As Germany’s biggest exporter and employer of more than 800,000 people, the auto industry is too important to the overall economy for any such demands to be fully met, they say.

“With regard to the diesel question the FDP and CDU and even parts of the Greens will be opposed to severe intervention,” said Hanns Koenig of Aurora Energy Research, a Britain-based consultancy to utilities, investors and political decision-makers.

“With coal, the situation is different and there is much that speaks in favor of a Green position.”

Shares in carmaker BMW were down 0.2 percent, while those in automotive supplier Continental dropped 0.4 percent. RWE - which operates more than 15 gigawatts (GW) of coal-fired plants in Germany, 38 percent of its total European capacity - fell 4.6 percent to a six-week low.

Analysts at Jefferies were skeptical coal plants could be phased out as quickly as desired by the Greens, saying the 2030 deadline would withdraw capacity currently providing about half of the country’s total electricity generation.

“Even if we assume that half of the market share gap is filled by the existing gas capacity in such a scenario, Germany will have to build an additional 130 GW of renewables to balance the market,” they wrote in a research note.

“We struggle to add the maths in such a scenario.”

Reporting by Christoph Steitz and Vera Eckert; Editing by Mark Potter and Adrian Croft

Our Standards:The Thomson Reuters Trust Principles.
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