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German talks to form coalition take first hurdle as details emerge

London (Platts)--12 Jan 2018 953 am EST/1453 GMT


Talks to form a coalition government in Germany have taken a first hurdle with Chancellor Angela Merkel's CDU/CSU and the SPD on Friday wrapping up a week of preliminary talks with a set of joint positions revealing first policy details.

* Parties wrap up week of preliminary talks with joint positions

* Progress pending green light by SPD members in Jan 21 vote

* Further details on climate targets, renewables expansion

Those position papers will now be discussed by the wider party bodies and face a crucial vote by SPD members in a party conference on January 21.

If given the green light, official talks to form a coalition can start with a target of forming a new "Grand Coalition" government before Easter.

The initial attempt to form a coalition with Merkel's CDU/CSU, the Greens and the liberal FDP failed at this stage in November.

POLICY DETAILS

News leaked earlier this week that the parties are ready to scrap the 2020 climate target of a 40% cut in carbon emissions already saw German Cal 20 power prices fall with a slightly different wording in the final document focusing more on the 2030 target, but little specific measures for the power sector ahead of 2020.

German energy lobby group BDEW described the joint position papers a "solid basis for coalition talks" but called for a more detailed timetable of measures with the energy industry needing urgent clarity for its investment plans for the next decade.

According to BDEW, the German power sector is on track to meet its 2020 carbon-cutting sector target with BDEW having presented a proposal in December to remove an additional 5 GW of coal capacity from the market by 2020 through an auction-based system with compensation for the operators.

So far, the short position paper for energy only refers to a "package of measures" to close the gap to the 2020 climate targets "as much as possible."

Instead of coal closure details, the parties plan to boost the renewables expansion with a 4 GW boost to onshore wind and solar PV auctions by 2020.

The already formed "structural change commission" will be tasked with coming up with details for further lignite coal plant closures by the end of this year amid a gradual phase-out, according to reports.

The leading energy policy negotiators in the preliminary talks -- the state ministers for North-Rhine Westphalia (Armin Laschet, CDU) and Lower Saxony (Stephan Weil, SPD) -- also agreed to set a new target of 65% share of renewable power in the annual mix by 2030.

Last year, renewables accounted for 36% in the German power mix with the share of coal falling to 37%, according to preliminary data by BDEW.

All of Germany's decarbonization efforts would be united into a 2030 climate protection law, to be adopted in 2019. That would include climate action plans for transport and the building sector, though there is no further detail yet on what those should contain.

According to the BDEW's reaction statement, the heating and transport sectors have the biggest potential for carbon emissions cuts with very little detail so far.

--Andreas Franke, andreas.franke@spglobal.com

--Edited by Maurice Geller, maurice,geller@spglobal.com




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