Decarbonizing Deutschland

The new government under Chancellor Olaf Scholz is repositioning German society and the German economy with an even sharper focus on decarbonization.

February, 2022

Combining ecology and the economy is a goal Germany has pursued for decades. Now, for the first time, this connection is anchored in the government’s institutional structure. The coalition agreement between the new governing parties – Olaf Scholz’s Social Democrats (SPD), the environmentalist Greens and the business-friendly Free Democrats (FDP) – has created a new “superministry,” the Federal Ministry for Economic Affairs and Climate Action, headed up by Robert Habeck of the Green Party.

Forest turbines – a coming trend? The use of forest sites for wind turbines is permitted in several German regional states. By the end of 2020, there were 2,086 of them. As there are no national regulations governing the construction of turbines in forests, each regional state makes its own rules.

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“We think of economic development and ecological preservation together,” the governing parties stated in the coalition contract signed at the end of last year. “An energy infrastructure for renewable energy and hydrogen is a precondition for Europe remaining able to act and compete in the 21st century.”

According to Germany Trade & Invest’s director of Energy, Construction and Environmental Technologies, Thomas Grigoleit, this amounts to “a concentrated effort to accelerate the phaseout of coal as an energy source.” And it will bring about a wealth of opportunities for foreign investors in Germany. “The expansion of renewables, the creation of a hydrogen economy and infrastructure, and the continuing decarbonization of the transportation and logistics sector will offer a historical chance in growing markets for German and international cleantech companies,” he says.

Facts & Figures

80%

Government target for renewables in German electricity consumption by 2030*

- 65%

Germany’s target for greenhouse gas reduction by 2030 compared to 1990**

392bn

Market volume of Germany’s environmental technology and resource efficiency sectors in 2020***

Sources: *coalition agreement, **Ministry for Economic Affairs and Climate Action, ***Roland Berger

In any event, by law Germany must become carbon-neutral at the latest by 2045. That target still requires big shifts in a variety of economic sectors and in society as a whole.

Germany is investing massively in hydrogen as a carrier of energy produced by renewable sources. The technology is a major hope for the decarbonizing industry. So, too, are the transitions to electric mobility and circular economies, bans on plastic packaging and the greening of information technology, as you will see on the pages to come.