Our most important findings


  1. 1

    The basic materials industry is facing a major challenge: it must make a 25% reduction in emissions by 2030 and achieve near zero emissions by 2050 – but emission levels have remained constant over the last ten years.

    Breakthrough innovations are thus needed to enable the climate-neutral production of steel, chemicals and cement. Gradual efficiency improvements remain important, but they are no longer sufficient.

  2. 2

    The technologies needed for climate-neutral industry are already available – or are close to market readiness.

    Green hydrogen will play a central role in achieving carbon neutrality in the steel and chemical industries. Particularly in the chemicals industry, the closing of material loops will be a core strategy. In the cement industry, new binders and carbon capture and storage (CCS) will be key technologies.

  3. 3

    Industry needs a new regulatory framework over the short term, as a major reinvestment phase will occur between 2020 and 2030. Promising political instruments include Carbon Contracts for Difference (CfD), a green hydrogen quota, and a green public procurement commitment by the federal government.

    With the right mix of policy instruments, the German government can ensure reliable conditions for investment while also incentivising behaviour at various levels of the supply chain: upstream, midstream and downstream. By contrast, continued investment into conventional technologies risks stranded assets, as new industrial plants have lifespans well beyond 2050.

  4. 4

    The future of German industry must be climate-neutral. Germany now has the opportunity to become a technology leader in key low-carbon technologies with a significant potential upside.

    By ushering in climate-neutral industry at home, Germany could help to demonstrate the viability of a climate-neutral industry and thereby help to foster a global market for low-carbon technologies worth billions.

  1. 1

    Wholesale spot power prices are on the decline in many parts of Europe, and are lowest in Germany and Central Eastern Europe (especially in Poland and the Czech Republic). Meanwhile, prices have been rising in the US.

    Since 2011, spot prices have been decreasing in Europe, except for in the UK, Belgium and the Netherlands. While spot prices in Germany were higher than in the US during 2010-2012, in 2013 they fell below the New York ISO prices, and converged with those of other US regions. In many other European markets, the gap with US prices remains significant.

  2. 2

    Wholesale market prices can serve as a starting point for comparing the energy costs of European industries, especially energy-intensive industries. Nevertheless, this approach has inherent limitations:

    (1) Wholesale prices don’t necessarilyaccurately reflect the “energy component” of prices paid by end users, due to differences in purchasing strategies, longtermcontracts and potential price regulation; (2) Several additional components must be taken into account as well (gridtariffs, renewable levies and other taxes), from which industrial actors may receive partial or full exemptions.

  3. 3

    While numerous European companies have complained of market distortion due to regulatory favouritism for Germany’s energy-intensive industries,...

    ...caution must be exercised when attempting to directly compare industrial end-use pricesbetween countries and sectors. Against the backdrop of decreasing wholesale prices and increasing exemptionsfor energy-intensive consumers in Germany, several EU member states have argued that domestic regulations inGermany create market distortions that unduly favour German firms. Because firms in different regions and sectorsvary considerably in the extent to which they pay wholesale market prices and/or receive tax exemptions and levyreductions, comparing prices between sectors and countries is a difficult task. The heterogeneity of the situation is notfully and transparently captured by European statistics.

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