Q8 How does the energy transition affect the domestic economy as a whole?

Germany has successfully decoupled economic growth from energy consumption. The production of low-carbon technologies and the promotion of energy efficiency have stimulated innovation, created employment opportunities, and increased local income. Overall, the energy transition continues to have a net positive effect on the German economy.

The German Energiewende: an attempt to re-establish Germany as an international climate leader, and a provider and market for break-through technologies

The accelerated deployment of climate-friendly technologies in combination with a strong climate policy will ensure that Germany achieves a climate-neutral economy and contributes to international climate change mitigation through net-negative emissions starting in 2045.

Climate neutrality by 2045 also promises to make Germany – Europe’s largest economy and GHG emitter – a lead market for low-carbon technologies. This, in turn, would create tremendous export potential for the German industry and businesses. It would lead to new opportunities for regional collaboration on issues such as increasing international capital flows for renewable energy technologies, cooperative efforts in technology, trade agreements to facilitate a circular carbon economy and accelerate development and the deployment of innovative technologies such as clean hydrogen and negative emission technology. To exploit this potential, it is crucial that Germany expands renewable energy and works to decarbonise industry, transport, and agriculture while expediting the development of a hydrogen economy and carbon sequestration.

 

The German Energiewende is securing and creating jobs

The Energiewende has had an important impact on the employment structure of the energy sector in Germany. In 2020, the renewable industry alone accounted for approximately 300 000 jobs. Some renewable energy sectors (biomass, hydropower, geothermal energy) have showed only minor changes in employment. But other sectors such as the solar industry have experienced a profound restructuring as about 100,000 jobs have been lost since 2012 with renewables becoming a global market, creating fierce competition, especially from Asia. Recently, however, policymakers have been working to increase the attractiveness of Germany as a production site, and domestic manufacturing companies are gradually ramping up their production.

Overall, ambitious and rapid climate policy action strengthens Germany as a business location and creates more new and attractive jobs than those lost through structural change. For example, a study by the Boston Consulting Group commissioned by Agora Verkehrswende concludes that, on balance, more value and jobs will be created in the German automotive industry in 2030 than today if structural change is undertaken boldly. An example of this is the promotion of the establishment of battery factories and car software companies.

Overall, Germany urgently needs to address the shortage of skilled workers across all sectors, but specifically the building sector. Reducing dependence on fossil fuels – particularly natural gas – requires enough skilled workers to refurbish houses, expand renewable energies and implement the ramp-up of heat pumps. It will be a central task in the years to come to introduce training and education measures to ensure that a sufficient number of skilled workers in trade and administration is available.

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Last revision on 16/09/2022

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