Energiewende: Germany’s planned transition to a low-carbon, nuclear-free economy

Since 2010, Germany has embarked on a long-term energy transition to make the economy virtually climate neutral by 2045. The energy transition, known as Energiewende, is a large-scale economic and ecological project. Germany’s proactive role in advancing green environmental policies and the adoption of its National Strategy for Sustainable Development makes it a pioneer in renewable energy.

Germany initiated Energiewende (“energy turnaround”), an ambitious plan for making its energy system more efficient, supplied mainly by renewable energy sources—i.e., wind, solar, and geothermal power—in 2010. The Energiewende arose in part from grassroots movements against nuclear power and in support of environmental protection.

The commitment to Energiewende is laid out in the Climate Change Act, which sets intermediary emission reduction targets for 2030 (a reduction of 65 percent against 1990 levels) and 2040 (reduction by at least 88 percent). From 2045 on, Germany aims to have a net negative emissions balance—that is, it will use natural sinks, such as trees and soil, to remove more greenhouse gases than it emits. Energiewende consists of two pillars:

1. An accelerated phase-out of nuclear power, as well as the deployment of climate-friendly technologies: By 2045, renewable energy is expected to make up 60 percent of gross final consumption of energy, and 80 percent of the gross electricity consumption¹
2. An increase of energy efficiency: This entails reducing primary energy consumption by 20 percent by 2020, and by 50 percent by 2050 (as compared to 2008 levels).

In doing so, Energiewende is set to create a large number of jobs: some estimates indicate that since its adoption, more than 371,000 employment opportunities were created in the renewables industry by 2013.² Others estimate that by 2050, some 230,000 jobs will be created in the renewables sector alone.³ While there is general agreement that the renewable industry alone accounted for approximately 300,000 jobs, some renewable energy sectors (biomass, hydropower, geothermal energy) showed only minor changes in employment.

Implementation

The Energiewende structure in Germany is decentralized, with municipalities, large-scale industries, small- to medium-sized enterprises (SMEs) playing a significant role. ⁴ The Climate Change Act lays down specific economy-wide annual reduction targets as well as medium- and long-term targets in all sectors of the economy—energy, buildings, transport, industry, and agriculture.

Emissions and energy transition trends are subject to an annual monitoring process and measured against postulated climate goals, which leads to regular revisions of policies and targets.⁵ The process is led by the Federal Ministry for Economic Affairs and Energy. Along with the government report, a scientific opinion is published by an independent commission of four renowned energy experts, which in turn examines greenhouse gas emissions trends, assesses governmental action, and proposes additional measures to close the ambition or implementation gap. The most recent report is from 2021.⁶ The next report is expected in the summer of 2023 in a modernized and adapted format.

Cost

There are real difficulties associated with estimating costs of the transition: adding up the funds spent on renewables and on phasing out nuclear power, only results in a sum that shows the energy transition’s investment needs. A true calculation must also take into account the projected savings, which inevitably involves comparison with a counterfactual scenario where Germany had not implemented Energiewende at all. This estimation of economic gains is almost impossible due to the plethora of assumptions it would involve. Therefore, the German government stated in early 2018 that the total cost of Energiewende is unknown.⁷ More information on estimating the costs of Germany’s energy transition can be found here.

Assessment

Many environmentalists look to Germany as a beacon for an industrialized nation that is abandoning fossil fuels without sacrificing growth—in other words, it is attempting to decouple economic growth from energy consumption. However, some critics argue the German experience confirms such transformation comes at a high cost to consumers and industry, and does not automatically reduce carbon emissions.

It is likely that Germany reached many of its energy and climate objectives in 2020, though this may partly be due to the (economy cooling) effects of the COVID-19 pandemic.⁸ Compared to 1990 levels, emissions in Germany have fallen by 38.7 percent. In 2020, this drop was at just under 41 percent. However, more recent trends have bucked this trend: Germany’s greenhouse gas emissions increased by nearly five percent in 2021 compared to the previous year due to the expected rebound from the economic shutdowns wrought by COVID-19. Meanwhile, due to increased coal use in response to the 2022 energy crisis–exacerbated by Russia’s invasion of Ukraine and Germany’s exit from nuclear power–emissions are expected to have increased again in 2022.⁹ Despite these trends, the country gave up nuclear power by the end of 2022.

In terms of areas requiring improvement, emissions from trucks and passenger cars remain stubbornly high, and renewables and grid expansion are lagging. However, Germany’s environmental technology is expected to quadruple over the coming years, reaching 16 percent of manufacturing output by 2030 and employing more people than the automotive and machine tool industries combined.¹⁰

In fact, Energiewende has had a profound impact on job creation in the energy sector. While some jobs (approximately 100,000) were lost, particularly in the solar industry, policymakers have been working to make Germany a more attractive production site, creating more jobs than those lost, through structural change, essential to a just transition. Since the adoption of Energiewende, more than 371,000 employment opportunities were created in the renewables industry in 2013. ¹¹ A regional analysis shows that employment from the renewable energy sector is almost equally distributed over Germany.¹²

A recent study found that on balance, more value and jobs will be created in the German automotive industry in 2030 if structural change is undertaken ambitiously. This requires skilled workers across all sectors, particularly the building sector. ¹³ Consequently, Germany has adopted an integrated approach to employment promotion as it emphasizes technical and vocational education and training as well as basic school education and continuous professional development. The objective of this approach is to enhance the skills of the younger generations to meet the ever-growing demands of green economic sectors.¹⁴

Finally, while Germany remains ahead, even of its EU counterparts, in terms of environmental standard-setting and action, recent developments in the aftermath of the 2021 general elections, as well from the 2022 Russian invasion of Ukraine, has shifted the politics of energy transition in Germany. Concessions have included backing government plans to build a series of liquefied natural gas terminals on Germany’s northern coast and reactivating mothballed coal plants, whilst extending the life of its atomic reactors. Another was an agreement to speed up the approval for big infrastructure projects, which include not just wind farms, but also 144 road schemes across Germany–the latter being an FDP demand.¹⁵

Tags

• Climate & Environment
• Europe
• Future Generations
• Germany
• High-Income Country
• Labor
• Universal