Carmakers, coal plants seen suffering if Greens join German coalition

  • World
  • Monday, 25 Sep 2017

FILE PHOTO: A Volkswagen (VW) logo covered with dust is seen in Grafenwoehr, Germany, October 26, 2016. REUTERS/Michaela Rehle/File Photo - RC15743C2850

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

Following Sunday's general election, Chancellor Angela Merkel's recent coalition partner, the Social Democrats (SPD), said it would go into opposition, meaning she is now likely to seek a deal with the Free Democrats and Greens.

Coalition talks are sure to 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 of nuclear power and a diesel emissions scandal, respectively.

Among their policies, the Greens hope to ban the sale of new combustion-engine cars from 2030 - a decade earlier than plans already outlined in France and Britain.

"On the whole, the Greens pursue more ambitious goals and a more radical response to the diesel scandal," Morgan Stanley analysts wrote in a note on Monday.

The Greens are also calling for a quick phasing out of coal power plants and their complete closure by 2030.

Shares in carmakers BMW , Daimler and Volkswagen were down 0.1-0.7 percent on Monday, while those in RWE - which operates 15.25 gigawatts (GW) of coal-fired plants in Germany, 38 percent of its total European capacity - fell 4.1 percent to a six-week low.

Analysts at Jefferies, however, were sceptical 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 ... We struggle to add the maths in such a scenario," they wrote in a research note.

(Reporting by Christoph Steitz; Editing by Mark Potter)

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