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German Green Car Reversal in Porsche State Opens Road to Merkel

August 22, 2013

German Green Car Reversal in Porsche State Opens Road to Merkel

Baden-Wuerttemberg spends more than 50 million euros ($67 million) funding electric mobility projects, including 2.4 million euros on e-charging stations in Stuttgart used by about 400 electric Smart models of Daimler's Car2go car-sharing program. Photographer: Guenter Schiffmann/Bloomberg

In April 2011, before he became Germany’s first state premier from the Greens party, Winfried Kretschmann said he’d like fewer cars on the roads. Two days later, the head of a global automaker came to his office.

“He told me his target was zero emissions,” Kretschmann, now the prime minister of Baden-Wuerttemberg, said in the garden of his official villa in the hills overlooking Stuttgart, the state capital. “I told him we can reach an understanding.”

Kretschmann’s accommodation with the auto industry that provides one in six jobs in his state illustrates his ability to balance environmental values with stewardship of an economy the size of Sweden’s. Former U.S. Secretary of State Henry Kissinger is among those who have visited to hear how this new breed of Green politician combines his twin goals.

Ecology and the economy “go hand in hand,” Kretschmann said in the Aug. 15 interview, declining to name the auto executive. “Sustainable policies bring about economic prosperity and a high quality of life.”

Kretschmann’s election ended 58 years of uninterrupted rule in Baden-Wuerttemberg by Chancellor Angela Merkel’s Christian Democratic Union party. He is seeking to make the revolution permanent by encouraging companies in the state to become world pioneers in green technology, for example investing public funds in a city mobility project with Daimler AG. (DAI) It’s a model he says Merkel would do well to emulate to ensure Germany stays globally competitive after Sept. 22 federal elections.

‘Reconstructed Green’

“The key to the Greens’ future is the extent to which they reconstruct from being zero-growth, anti-industry and pro tax and spend,” Fredrik Erixon, the director of the European Centre for International Political Economy in Brussels, said by phone. “Kretschmann represents this reconstructed Greens party.”

Baden-Wuerttemberg, a wine-growing region fed by the River Rhine that borders France to the west and Switzerland to the south, is home to luxury carmakers Porsche SE and Mercedes-maker Daimler as well as the world’s largest auto-parts maker, Robert Bosch GmbH.

It’s also the state where 345 renewable-energy patents were filed between 2008 and 2012, more than anywhere else in Germany. Enough solar panels were installed at the end of last year -- 4.4 gigawatts -- to power about 1 million homes, second only to neighboring Bavaria. At 4 percent, the state’s unemployment rate is almost half the German average and less than a third that of the 17 nation euro area.

Electric Porsche

A biology and chemistry teacher by training who grew up in a village in the Swabian hills, Kretschmann, 65, was a self-confessed “left-wing radical” in 1968, a course he now dismisses as “political folly,” according to his website. Now his mantra is “we won’t do anything that harms industry.”

One of his first visits after assuming office in May 2011 was to a Porsche plant, where he sat in an electric Boxster model. “No longer was it a problem for a Green to climb into that kind of car,” he said, wearing a light green polo shirt embroidered with his initials made by Trigema, a local company which promotes environmentally friendly products and touts its worker-friendly employment conditions.

Kretschmann came to power amid a surge in support for the anti-nuclear Greens following the Fukushima disaster in Japan. Polls suggest it was no fluke: while backing for the Greens nationally was cut by half since then to about 13 percent, the party has gained in popularity in Baden-Wuerttemberg, to 28 percent.

Party Clashes

The current holder of the rotating presidency of the Bundesrat, parliament’s upper house, Kretschmann’s approach to policy has caused him to clash with his party on more than one occasion. He objected to the Greens’ election platform of tax increases, warning the leadership in a public letter in April to avoid any move that would be detrimental to business.

The Greens rule Baden-Wuerttemberg with the Social Democrats, a coalition that also governed nationally from 1998 until 2005 under SPD Chancellor Gerhard Schroeder. While Kretschmann shares his party’s official position of favoring an alliance with the SPD after the election, he has criticized its campaign.

With polls showing the SPD trailing the chancellor’s Christian Democratic bloc by as many as 19 percentage points, he broke ranks with his fellow Greens and refused to rule out an alliance with Merkel.

“He combines pragmatism with some ideology but his convictions are toward the center,” said Erixon. “It will take a few years but the Greens are going to squeeze themselves away from their embrace of the Social Democrats” and toward Merkel’s CDU, Erixon said.

Schaeuble Criticism

The feeling isn’t necessarily mutual, however. Merkel has lost few opportunities on the campaign trail to denounce opposition tax plans as “poison.” Finance Minister Wolfgang Schaeuble, who hails from Baden-Wuerttemberg, singled out Kretschmann’s government for criticism on Aug. 20, saying it’s running up new debt even as the economy thrives. “There is only one explanation,” said Schaeuble. “There’s a red-green state government that can’t make do with the money it has.”

Baden-Wuerttemberg, which pioneered inventions including the automobile, matches, the plastic wall plug and the zeppelin, has thousands of small and medium-sized technology companies that produce everything from high-insulation windows to machinery to make flat-panel displays.

About 5 percent of gross domestic product is invested in research and development, more than any other European region, and is a decisive factor in its success, said Kretschmann. That helps the “green message” to be realized by companies from engineering to lightweight construction and the auto industry.

‘New Thinking’

In addition, applying “completely new thinking to mobility,” by linking pedestrians, cyclists, cars and public transport intelligently, is key to driving down emissions in cities that are home to half the world’s population, he said.

Baden-Wuerttemberg spends more than 50 million euros ($67 million) funding electric mobility projects, including 2.4 million euros on e-charging stations in Stuttgart used by about 400 electric Smart models of Daimler’s Car2go car-sharing program. Kretschmann said he’s also talking to International Business Machines Corp. (IBM:US) about how to predict traffic jams and thus improve mobility in the region.

Kretschmann, sitting in the shade of a copper beech tree at the head of a table laden with biscuits and bottles of organic fruit juice, said he’s under no illusions that “millions of cars” will be added globally, meaning “what kind of cars we’re building” is key.

“The industry is realizing that many young people aren’t into the car as a status symbol anymore, they’re into mobility, into the Internet,” he said. “Recognizing these changes is important, and it’s Green. That’s why we’re in power here.”

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

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


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