Merkel's CDU Hints at German Nuclear-Policy Shift After State Vote Defeat

Chancellor Angela Merkel’s party said that most of Germany’s oldest atomic reactors will probably close following safety checks, signaling a shift in energy policy after the anti-nuclear Greens surged in state elections.

The future of Germany’s 17 nuclear plants took center stage in yesterday’s ballots in Baden-Wuerttemberg and Rhineland- Palatinate after Merkel, reacting to the atomic crisis in Japan, ordered a 90-day closure of the seven oldest reactors while reviewing the running time of all plants.

“As a supporter of the peaceful use of nuclear energy, my view on nuclear energy has changed since the events in Japan,” Merkel said today as her Christian Democrats prepared to give up power in Baden-Wuerttemberg after 58 years. “I think we’ll come out with a good concept, but it will be a changed concept. What happened in Japan was so improbable that I believe it will have an impact” on Germany’s risk assessment for nuclear power.

The Greens were poised to enter both regional governments after almost 7 million Germans voted in the shadow of the nuclear disaster in Japan, in the biggest electoral test so far of Merkel’s second-term government. In Baden-Wuerttemberg, the Greens are set to lead their first state administration.

European Union carbon-permit and power prices advanced today on speculation that the results in Baden-Wuerttemberg and neighboring Rhineland-Palatinate will boost use of fossil fuels.

E.ON, RWE

E.ON AG (EOAN), Germany’s largest utility, fell 0.1 percent to 21.39 euros as of 2:45 p.m. local time in Frankfurt trading. RWE AG (RWE) added 0.6 percent. Shares in E.ON have declined 2.0 percent since March 14, when Merkel suspended a planned extension of the lifespan of nuclear plants, while RWE has fallen 1.5 percent. The euro fell 0.4 percent to $1.4029 at 2:34 p.m.

Hermann Groehe, the general secretary of Merkel’s Christian Democratic Union, said most of the oldest reactors may never start up again. They are E.ON’s Isar 1 and Unterweser, RWE’s Biblis A and B, EnBW Energie Baden-Wuerttemberg AG (EBK)’s Philippsburg 1 and Neckarwestheim 1 as well as Brunsbuettel, which is co-owned by E.ON and Vattenfall AB.

“I expect the majority of the seven temporarily idled reactors to be permanently shut down,” because modernizing them would be too expensive, Groehe said on ARD television. Safety checks will be “tough” and Germany will move “quickly into the era of renewable energy.”

Photographer: Jock Fistick/Bloomberg

Germany's chancellor Angela Merkel. Close

Germany's chancellor Angela Merkel.

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Photographer: Jock Fistick/Bloomberg

Germany's chancellor Angela Merkel.

‘Radical Reordering’

The election result “will ultimately lead to a radical re- ordering of Germany’s nuclear-energy policy, and an accelerated schedule for the permanent shutdown of some or all of Germany’s 17 nuclear reactors,” said Mark Lewis, a Deutsche Bank AG analyst in Paris.

After taking a record 24.2 percent in yesterday’s Baden- Wuerttemberg vote, the Greens are set to gain sway over policy in a state whose economy is bigger than Belgium and Luxembourg combined, driven by companies such as Porsche AG and SAP AG. (SAP) Governing the region would also give them control of EnBW Energie Baden-Wuerttemberg, Germany’s third-biggest utility, and its four reactors in the state just as public concern soars.

Merkel’s CDU tumbled to 39 percent in Baden-Wuerttemberg, its worst result there since 1952, while its Free Democratic Party coalition ally won 5.3 percent. That leaves the two parties, which form the national government in Berlin, with fewer seats than the Greens and Social Democrats, the main opposition party nationally, which won 23.1 percent.

‘Bedrock Territory’

“Baden-Wuerttemberg isn’t just another German state but bedrock CDU territory with a showcase economy,” Ulrich Sarcinelli, a political scientist at the University of Koblenz- Landau, said by phone. “When voters in that state abandon you after almost 60 years, you’re not going to walk away unruffled. But Merkel will struggle to find quick answers on nuclear policy: quick, quicker, quickest exit? All the scenarios are fraught with problems.”

Even before yesterday’s twin ballots, Merkel was backing off her extension of the lifetime of German nuclear plants by an average of 12 years beyond their planned closing by about 2022. She pushed through the change in the policy, set in 2002 by a federal government of Social Democrats and Greens led by her SPD predecessor, Gerhard Schroeder, as the centerpiece of her second term after her re-election in 2009.

After the disaster in Japan, Merkel ordered the safety review and the idling of the seven oldest plants, including two that were already offline. The rest comprise 25 percent of German nuclear capacity, which accounted for 23 percent of the power generated in the country last year, according to the Berlin-based BDEW utility industry lobby group.

Closure Push

Winfried Kretschmann, the Green candidate for state premier in Baden-Wuerttemberg who staked his claim to the post after his party’s gains, said on March 23 that his party will push to shut the seven oldest reactors and Vattenfall AB’s Kruemmel plant.

About 250,000 people took part in protests across Germany on March 26 calling for an end to atomic power in what organizers said were some of the country’s biggest anti-nuclear demonstrations.

Merkel also faces pressure to renounce nuclear power from the Free Democrats, who lost votes in both states. The FDP lost all its seats in Rhineland-Palatinate, where the SPD has invited the Greens to begin talks on forming a coalition government.

“The elections were a clear democratic signal,” Michael Kauch, the FDP’s environmental spokesman in the national parliament, said in a statement. “The majority of Germans want to scrap nuclear power more quickly.”

While Groehe said the chancellor’s party “is firmly behind Angela Merkel,” the defeat in a CDU stronghold after her policy switch on nuclear power may raise questions about her authority.

“At some point, members of her party are going to start asking whether she can lead this party and hold it together,” Lothar Probst, a political scientist at the University of Bremen, said by phone. “This could well be the beginning of the end of the Merkel era.”

To contact the reporters on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net; Patrick Donahue at pdonahue1@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net

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