The impact of the end of the „traffic light coalition" for the gas industry

The 6th of November this year was probably a day that we will not soon forget. In the morning, it became clear that Donald Trump had won the US presidential election. Few people in Europe expected or wanted this to happen with such clarity. I was at the VIK annual conference that day, and the general assessment was that the German governing coalition would get its act together in the face of Trump's clear victory and not let it come to a showdown that evening. But this was a clear miscalculation. In the evening, Chancellor Olaf Scholz sacked Finance Minister Christian Lindner. This means that the traffic light coalition is history. A minority government is in place until 23 February 2025, the scheduled date for early elections. This could prove unfortunate for the energy industry. Key legislative projects have not been finalised. Whether the two remaining coalition partners with the FDP (Liberal Democratic Party) and/or the CDU/CSU (Christian Democrats) will be able to agree on finalising at least some of these projects is entirely unclear, but probably unlikely. In the Topic of the Month, I have summarised the ‘pending’ projects that are important from a gas industry perspective. It would be bad for the industry if the legislative procedures for the Power Plant Safety Act or the Carbon Dioxide Storage and Transport Act had to be started all over again in the next electoral term. But we will only know more after Scholz has called a vote of confidence on 16 December.

Since mid-November, Gazprom Export has stopped supplying Austria's OMV. This has brought the issue of Russia's remaining gas supplies back into the spotlight. However, the situation is a bit odd. Transit volumes through Ukraine are unaffected by this development. Russian gas also continues to flow to Austria. OMV may now be buying volumes from a trader at the Austrian trading point CEGH VHP that Gazprom Export previously sold at the trading point. At the moment, it looks like this could be a stable situation until the end of December. But who knows?

The only thing that remains for me to do is to wish you, dear readers, a happy new year. You will not hear from me again until early January. By then, there should be more clarity on what is still politically possible in Germany and whether volumes are still flowing through Ukraine to Central Europe.

Dr. Heiko Lohmann
Freelancer

E-Mail +49 30 8824005

Topic of the month: The impact of the end of the „traffic light coalition" for the gas industry

On 6 November 2024, Federal Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner. With the exception of the Minister for Digital Affairs and Transport, Volker Wissing, the other FDP ministers subsequently resigned. Since 7 November, the government no longer has a majority in the Bundestag (the lower house of German parliament). Mr Scholz will put a vote of confidence to the Bundestag on 16 December in the reasonable hope that a majority of the parliament will vote ‘no’. New elections will then be held on 23 February 2025. Up to this point, you didn't have to read my Gasmarkt journal – the information was in every newspaper.

However, the Federal Ministry of Economics and Climate Action (BMWK) and the Bundestag still have a number of legislative proposals that are relevant to the gas industry. These will be listed below - hopefully completely. But first I would like to report on some of the energy and climate policy content of the ‘Lindner Paper’. In my opinion, it was clear at the time the paper was published that the coalition would have to collapse. There was only one reason why I had doubts: There was the US election on 5 November. On 6 November, Donald Trump's victory was already clear in the morning. I would have thought that, given the situation in the US and the worsening situation in Ukraine, the coalition partners would get their act together. Only Robert Habeck, the economics minister, made an effort, saying on 4 November that he would release the ‘Intel billions’ to consolidate the budget. The construction of a chip factory near Magdeburg by the American manufacturer Intel was to be subsidised with around ten billion euros from the Climate and Transformation Fund (KTF). Due to Intel's economic problems, the plant will not be built at all or will be severely delayed. Mr Habeck originally wanted to leave the money in the KTF to finance climate change projects. But he was prepared to transfer the first tranche of four million euros for 2025 to the general federal budget.Christian Lindner's ‘divorce paper’.