Q10 What’s next for Germany?
Reaching the goal of climate neutrality by 2045 is ambitious, but achievable. It requires decisive policy action and a comprehensive mix of instruments and measures. There will be no simple "one size fits all" solution. Driving the energy transition poses a massive challenge for policymakers and administrators and will demand much from society in general. However, given the extraordinary, global task of combating climate change and leaving behind a viable planet for future generations, whilst ensuring energy sovereignty, there is no alternative. The goals of the Paris Agreement are non-negotiable. All areas of society and the economy have to contribute.
Germany must accelerate the pace of the energy transition to reach climate and energy sovereignty objectives
The decision of the Federal Constitutional Court, which obliges politicians to improve the Climate Protection Act, and Russia’s war against Ukraine, which casts a harsh spotlight on the European Union’s and especially Germany’s current reliance on Russian fossil gas imports, has triggered a long-overdue debate on the best way to achieve climate neutrality while also securing energy supply. Germany’s enhanced climate ambitions must also consider additional policy objectives, such as cost-effectiveness, the preservation of investment cycles, and public support. To achieve them, German climate policy will have to pick up its pace significantly. The European Commission’s comprehensive legislative package, presented in July and December 2021 under the title "Fit for 55", is a necessary driver, but it cannot be a substitute for decisive action at the national level. In the past, the expansion of renewables has been far too slow, coal-fired power plants have benefitted from higher gas prices, and the energy transition in the transport and heating sectors, amongst others, is making scant progress (refer to Q1 for more). Only strong political will and a mix of instruments can reverse the trend.
In 2022, Germany needs to accelerate the reduction of its reliance on fossil fuels, secure enough land for onshore wind power, unleash the development of photovoltaics, and prepare the power grid for climate neutrality. Industry needs a workable investment framework. Green retrofits in the building sector and a socially-just transformation in the heating sector require clear guidelines and sufficient funding. At the European level, the focus will be on the implementation of the Commission's Fit-for-55 package, as well as the recent REPowerEU plan to make Europe independent from Russian fossil fuels well before 2030.
The energy transition is an enormous task that requires a broad mix of instruments and measures to ensure that the necessary emission reductions or disposal of nuclear waste are not left to the next generation while securing energy supply. The new goals of the Climate Protection Act have the force of law, and industry and private households need planning security for their investments. But CO2 pricing, regulations, support measures, and tax incentives can help ensure the success of an innovative and socially-balanced transformation of the German economy towards climate neutrality.