Germany’s Economics Ministry Gets a Green Makeover

December 2021

The new center-left/environmental/business-friendly government coalition led by Chancellor Olaf Scholz has brought with it a number of changes to the German Economics Ministry.

The ministry has been renamed the Ministry for Economic Affairs and Climate Action to reflect its expanded areas of responsibility, which combine the business and environmental concerns. The shift is personified by its new head, Minister Robert Habeck, who is also the co-leader of the Green Party.  He’s the first Green German economics minister, and his appointment signals Germany’s increasing commitment to climate protection while preserving its economic success and prosperity.

“The transition of the biggest industrialized country in Europe and the fourth biggest economy in the world toward climate neutrality is…the great structural challenge of our age,” Habeck said at his inauguration ceremony. “This will occasion debates but is also a massive opportunity. To build on the venerable tradition of this ministry – where Germany’s social market economy was instituted and with it Germany’s prosperity was created and maintained – and to make the social market economy into an ecological-social market economy.”

Habeck added that “only by allowing individuals to take part in success” would this economic transition be able to succeed.

“We have two main measures to this end in our coalition agreement,” Habeck said. “One is the combination of climate protection, energy and economic and medium-sized business policies. The other is raising private investment in Germany through public investment in Germany. We are going to have to raise or indeed kick off a massive amount of investment. We’ve created a special climate and transformation fund that is funded with many billions of euros. It will ensure the state can do itself job, namely infrastructural build-up.”

Habeck reemphasized that the new government wished to accelerate Germany’s phase-out of coal-generated power and expand the renewable production of electricity. But he also said the government’s attempts to achieve Germany’s ambitious climate goals would be guided by an “idealistic pragmatism.”

“We need the idealistic belief that we can succeed, but above all we need a pragmatic and not a dogmatic plan of action. Ideological debates should not be the tenor of the next four years, but rather success and output.”

Robert Habeck, German Minister for Economic Affairs and Climate Action © /Nadine Stegemann