VZCZCXRO1539
PP RUEHDF
DE RUEHRL #0359/01 0860552
ZNR UUUUU ZZH
P 270552Z MAR 09
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC PRIORITY 3684
INFO RUEHDF/AMCONSUL DUSSELDORF PRIORITY 0201

UNCLAS SECTION 01 OF 04 BERLIN 000359 
 
SIPDIS 
EUR 
STATE PASS TO STERN 
 
E.O. 12958: N/A 
TAGS: PREL OVIP GM
SUBJECT: SCENESETTER FOR SPECIAL ENVOY STERN'S VISIT TO 
BERLIN 
 
¶1. (SBU) Summary:   Special Envoy Stern, Mission Germany 
warmly welcomes your visit and looks forward to supporting a 
mix of productive meetings.  You will find your German 
interlocutors to be complimentary, congratulatory, and 
understanding of the broad challenges the Administration is 
facing simultaneously.  They eagerly welcome your deep 
engagement and will be closely listening for any signals of 
US planning as we approach Copenhagen.  They take deserved 
pride in their national and civil society leadership on the 
issue and will warmly appreciate the fact that you are 
willing to listen. 
 
¶2. (SBU) That said, they will universally expect the US to 
follow through on very robust planning for the post-2012 
period with credible midterm reductions and 
financial/technology support mechanisms to mitigate 
greenhouse gas emissions and assist developing countries with 
adaptation.  German policymakers are buffeted by the economic 
crisis, an approaching election, important decisions on 
domestic nuclear energy, and a public that wants both jobs 
and progress on climate matters. 
 
¶3. (SBU) Germany, the largest greenhouse gas emitter in 
Europe, has taken on ambitious abatement targets domestically 
and through the EU.  Aggressive domestic policies on energy 
efficiency and renewable energy sources have placed Germany 
on the path to meet its goals, but this undertaking faces 
serious threats from Germany's commitment to phase-out 
nuclear power and heavy resistance from German industry. 
Once a bastion of environmental concern in Europe, Germany is 
reeling from the economic crisis and upcoming elections may 
limit the resolve of Chancellor Merkel in supporting our push 
for robust reduction commitments from major emitters in the 
developing world.   End Summary. 
 
 
International and Domestic Emissions Commitments 
--------------------------------------------- ---- 
 
¶4. (U) Germany is a party to the EU 20/20/20 emissions 
reduction plan, in which the European Union has committed to 
reducing its collective emissions to 20% below 1990 levels, 
increasing the share of renewable energies in its energy 
generation portfolio to 20%, and a 20% reduction in energy 
demand by the year 2020.  The plan also contains a provision 
that would increase the EU's emissions reduction target to 
30% below 1990 levels if other major economies undertake 
similarly ambitious reduction goals. 
 
¶5. (U) After the 20/20/20 plan's passage, Germany indicated 
that to help the EU meet its aggregate reduction goals, it 
would agree to a binding 30% reduction goal by 2020. 
Germany's commitment also contains a provision that will 
increase its target to 40% below 1990 levels if the EU moves 
to its 30% reduction goal.  While their EU target is 
officially a 30% reduction, Germany's government domestically 
refers to the 40% goal. 
 
 
German Emissions Trends 
------------------------ 
 
¶6. (U) The most recent data available indicates that German 
emissions in 2006 were 18% below 1990 levels, and in 2007 
were 22% below 1990 levels.  The unseasonably warm 2006-2007 
winter and subsequent decline in energy demand for heating 
likely accounted for some of the 3% decrease.  Germany is 
therefore on track to meet its Kyoto target of 21% below 1990 
levels by 2012. 
 
¶7. (U) Under the Kyoto Protocol, the EU-15 has committed to a 
collective emissions reduction target of 8% below 1990 levels 
by 2020.  If the EU-15 is to meet this goal, Germany's 
ambitious emissions cuts will be instrumental in offsetting 
emissions from countries like Austria, Greece, Italy, and 
Spain, which have seen emissions increases since the 1990 
base year and are not projected to meet their individual 
Kyoto targets.  Other EU-15 and EU-25 countries, like 
Bulgaria, the Czech Republic, Estonia, and Slovenia, are 
projected to make deeper emissions cuts (in percentage terms) 
than Germany by 2010, but the scale of Germany's economy and 
emissions make its projected cuts the largest in absolute 
terms by a wide margin. 
 
 
Domestic Policy and Meseberg 
----------------------------- 
 
¶8. (U) The main instrument of German Climate Policy is the 
"Integrated Energy and Climate Program," which was agreed to 
 
BERLIN 00000359  002 OF 004 
 
 
by the German government in 2007, and is referred to as the 
"Meseberg Package."  The Meseberg Package consists of 
twenty-nine key elements, including: a mandate for increased 
combined heat and power (CHP) generation, mandates for an 
increased renewable share in electricity generated for heat 
and electricity generation; incentives for solar and wind 
energy producers, and mandates for stricter building codes 
and increased energy efficiency.  Analysts predict that 
implementation of the Meseberg Package will result in an 
emissions reduction to 34% below 1990 levels by 2020. 
Germany is still addressing how to makeup the 6% gap between 
the results of Meseberg implementation and the 40% reduction 
require to meet its domestic and possible EU goal. 
 
 
The Nuclear Question 
--------------------- 
 
¶9. (SBU) Commitments to reduce the supply of nuclear power, 
which currently provides about 20% of Germany's power 
generation, present an additional complicating factor in the 
German quest for emissions reduction.  The previous Social 
Democratic Party (SPD)/Green Schroeder-led coalition 
government passed legislation, known as the "nuclear 
moratorium," to phase-out all of Germany's remaining nuclear 
power plants by 2020.  Chancellor Merkel and her conservative 
party (CDU/CSU), the senior member of the current coalition 
government, have indicated that they would like to review the 
nuclear phase-out policy and some party spokespeople have 
explicitly expressed the desire to completely reverse the 
phase-out policy.  The junior coalition partner, the SPD, is 
vehemently opposed to any plans to extend nuclear power in 
Germany and have openly criticized Merkel's attempts to 
extend the life of nuclear power plants. 
 
¶10. (SBU) Fears about reactor safety, terrorism, and waste 
disposal combine with a strong environmental tradition and 
memories of the Chernobyl disaster to make nuclear power a 
sensitive issue for the German public.  The long-standing 
general aversion for nuclear power among Germans has, 
however, waned in recent years.  The results of a biannual 
survey by the Environment Ministry show that in December 
2006, 65% of Germans wanted the nuclear phase-out to proceed 
on schedule or faster, while 27% opposed the phase-out 
entirely or favored extending the life of existing nuclear 
facilities.  In December 2008, the same survey reported a 
slight pro-nuclear shift: 57% of Germans favored accelerating 
or maintaining the phase-out and 32% favored extending plant 
life or abandoning the moratorium policy.  The January 2009 
Russian-Ukrainian Gas crisis, which left many Germans with 
doubts about the country's energy security, may have helped 
bring the future of nuclear energy back into debate.  An 
informal poll conducted on the Environment Ministry's website 
in March indicated that 57% of Germans opposed the nuclear 
phase-out entirely, while only 28% supported the policy.  The 
staunchly anti-nuclear, Social Democrat-controlled Ministry 
removed the poll within a week. 
 
 
The "Climate Chancellor" faces Economic Crisis 
--------------------------------------------- -- 
 
¶11. (U) At the beginning of her term, Chancellor Merkel, a 
former Environment Minister herself, was hailed in the media 
as the "Climate Chancellor" for her efforts to elevate 
environmental concerns, especially climate change.  In 2007, 
Germany and Merkel held the rotating presidencies of both the 
G8 and EU, where she made combating climate change a top 
priority.  A particularly notable success came at the 
Heiligendamm G8 summit, where Chancellor Merkel was able to 
secure a commitment from the G8 members, including the Bush 
administration, to seriously consider taking action to halve 
global emissions by 2050. 
 
¶12. (SBU) The economic crisis, however, has brought a 
noticeable change in Merkel's commitment and attitude on 
these subjects.  The worldwide downturn has hurt Germany, the 
world's largest exporter, hard, particularly in the 
manufacturing sector, and a large portion of Merkel's 
conservative electoral base consists of employees and 
supporters of industry, especially in Bavaria and the rest of 
the German south.  Though she still holds a lead in the polls 
leading up to September's Parliamentary elections, Merkel is 
under intense political pressure from her electoral base to 
protect German jobs before September's parliamentary 
elections.  Germany is in its worst recession since World War 
II, and in the past year orders for industrial and investment 
goods have fallen by 37.9% and 41.8%, respectively.   Though 
the German government officially predicts a 2.25% GDP 
contraction for 2009, prominent economists are now predicting 
 
BERLIN 00000359  003 OF 004 
 
 
a GDP decline of between 5% and 7%.  The unemployment rate 
for February was 7.9%, and uncertainty over GM-owned Opel's 
future and the recent announcement of 3,000 job cuts by 
Thyssen-Krupp, Germany's largest steel producer, are not 
increasing confidence.  Faced with Germany's dire economic 
situation, Chancellor Merkel will likely be constrained in 
her ability to take further action on GHG mitigation. 
 
¶13. (SBU) Indicative of this pressure and the resulting 
change in Merkel's position is a statement made by Merkel in 
the wake of the Brussels EU Summit that she would not approve 
of any EU climate package or rules that would "endanger 
German jobs or investment."  Chancellor Merkel is under 
particular pressure from German heavy industry concerned 
about carbon leakage and the resulting job losses, especially 
in the auto, steel, glass, and cement industries.  Last 
December, Chancellor Merkel successfully lobbied the EU 
Commission for the exemption of German heavy industry from 
the planned auction of carbon permits in the EU Emissions 
Trading Scheme (ETS).  Chancellor Merkel also expressed deep 
opposition to EU legislation seeking to tax emissions from 
large cars, which would apply to the luxury sedans produced 
by German automakers.   The Association for Energy-Intensive 
Industries (VIK, whom you will meet at the scheduled 
roundtable), has made a particularly heavy effort to lobby 
German policymakers, and in concert with 14 similar 
federations from other member states, the EU.  VIK has 
recently presented analysis of the lessons learned from the 
EU ETS that argues against auctioning and allocation based on 
historic production.  They maintain that "dynamic 
benchmarking" using actual production reduces opportunity 
costs, eliminates windfall profits, and guarantees a total 
cap. 
 
 
Environment Ministry 
--------------------- 
 
¶14. (U) As part of the Grand Coalition agreement, the Social 
Democrats control the Environment Ministry.  Environment 
Minister Sigmar Gabriel is a strong supporter of global 
efforts to combat climate change.  He is also an outspoken 
critic of plans by Merkel and CDU/CSU to reconsider Germany's 
nuclear power policies.  Instead, Gabriel and the Ministry 
prefer drastic increases in energy efficiency and renewable 
energy sources, especially wind and solar, as the primary 
means for reducing Germany's emissions.  Matthias Machnig, 
also of the SPD, is the Ministry's State Secretary and 
Germany's chief negotiator in international climate fora.  He 
is a strong advocate of emissions trading regimes and has 
continually supported OECD- and worldwide linked carbon 
markets to reduce the cost of emissions abatement. 
 
 
Other Players ) NGOs and Research Institutes 
--------------------------------------------- 
 
¶15. (U) Germany has a strong community of international and 
domestic NGOs concerned with environmental and climate 
issues.  Greenpeace, Ecologic, BUND, E3G, Nature Conservancy, 
and the WWF, among others, maintain strong and influential 
German presences.  Dr. Andreas Kraemer, director of Ecologic, 
provides consulting on environmental policy and analysis to 
the Environment Ministry, the Ministry of Education and 
Research, and others.   While not as directly involved in the 
policy making process as other NGOs, Greenpeace Germany is 
one of the largest and most active chapters of Greenpeace 
International, and regularly stages high-profile protests 
against greenhouse gas emissions and demonstrations for 
climate protection.  As an example, in mid-March, Greenpeace 
activists hung a banner reading "If the world were a bank, it 
would have been saved long ago" 140 meters from the ground on 
Deutsche Bank's corporate headquarters.  Many German NGOs and 
their representatives undertake important environmental 
consultant and advisory roles to the EU and other 
international bodies. 
 
¶16. (U) German research institutes are also important players 
in the German climate policy scene.  Of particular import is 
the Potsdam Institute for Climate Impact Research (PIK), 
which is located in nearby Potsdam.  The Institute's 
Director, Prof. Dr. Hans-Joachim Schellnhuber, is Chancellor 
Merkel's personal advisor on climate policy.  PIK and its 
researchers are well-connected to the Intergovernmental Panel 
on Climate Change (IPCC) and occupy prominent positions in 
its structure and working groups.  Dr. Schellnhuber was the 
coordinating lead author of the Working Group II Synthesis 
report for 2001's Third Assessment Report of the IPCC.  Nine 
different PIK researchers participated as either contributing 
or leading authors on the Physical Science Basis section of 
 
BERLIN 00000359  004 OF 004 
 
 
the IPCC's 2007 Fourth Assessment Report. 
 
 
German Expectations of the U.S. 
-------------------------------- 
 
¶17. (SBU) Germans with whom we have spoken have universally 
welcomed your March 3rd speech at the Climate Change 
Symposium as the first specifics on the American climate 
change plan and an indication that the U.S. is serious about 
moving wisely toward Copenhagen and beyond.  While 
impressions of the speech were positive overall, Germany will 
press the U.S. heavily on midterm targets and support for 
international financing.  They will seek commitments*even 
symbolic*of midterm targets lower than 1990 levels. 
Schellnhuber will likely repeat this, requesting a midterm 
target of 5% to 10%. 
 
¶18. (SBU) Both Germany and the U.S support the long-term 
emissions reduction goal of 80% below 1990 levels by 2050, 
but there will be some conflict regarding the trajectory 
taken to reach this goal.  The midterm target that you 
mentioned at the Climate Change Symposium of 14% below 2005 
levels  -- or, equivalently, equal to 1990 levels -- is seen 
in Germany as an opening gambit from which the U.S. will 
negotiate toward a more meaningful commitment.  Our proposed 
target is not seen as a sufficiently ambitious step toward 
the final reduction goal by a country that is well on its way 
to meeting its 40% reduction goal by the same period. 
 
¶19. (SBU) Like other countries reeling from the economic 
crisis, Germany will also look for a strong U.S. commitment 
to financing developing countries' abatement strategies. 
Germany is wary of acting as the first-mover and announcing 
significant financial aid for developing countries' GHG 
reduction measures before the U.S. and other large nations 
make commitments of their own.  They are resistant to 
building pressure at the governmental level to shoulder 
increasing burdens from within Europe, and the public is 
likely not far behind.  Like other large countries, Germany 
will likely push for developing nations to fund their own 
"win-win" energy efficiency measures as they begin to reduce 
greenhouse gas emissions. 
 
¶20. (SBU) As a world leader in alternative energy technology, 
especially in the solar and wind fields, Germany sees 
tremendous potential in the U.S. market, but is also wary of 
losing its competitive advantage as well-funded American 
firms ramp up research and development as our stimulus 
efforts get traction.  Germany will pitch a high-level 
dialogue between government, scientists, and industry to 
lobby for a steeper reduction trajectory and explore business 
opportunities for German companies. 
Koenig