To reach political goals, renewable energy expansion must accelerate. Discover what policymakers should address to ignite the turbo.

Expanding domestic potentials strengthens the security of supply for companies. The production of renewable gases and conventional gas extraction, including sustainable shale gas extraction on land and at sea, creates a broader energy offering. As a result, the energy supply of the German economy becomes less susceptible to external shocks caused by the sudden loss of import sources or routes.

At the same time, increased use of shallow and deep geothermal energy offers further potentials. Accelerating planning and approval processes and adjusting legal framework conditions for water and environmental compatibility assessments help to unlock these potentials.

Gas is set to remain essential as a bridging technology for many years. However, relying solely on gas as the only bridging solution is not sufficient from an economic perspective—neither regarding the resilience of energy supply nor the costs involved. To achieve a resilient energy mix at competitive prices, weather-independent energy carriers and technologies such as hydropower, deep geothermal energy, biomass, and likely also coal-fired power plants will be required, at least until storage technologies, demand flexibility, and hydrogen power plants are available on a scalable level.

In some IHK regions, demands have been raised to include nuclear energy as a climate-neutral and future-oriented generation capacity in Germany’s energy mix by 2030. Against the backdrop of lacking innovations in the use of nuclear energy, dwindling uranium reserves, and above all the absence of permanent storage facilities, the majority of businesses advocate extending the operating life of nuclear power plants in Germany until the end of the energy crisis.

There is vast potential in the fields of demand flexibility, power-to-x solutions, and the development of energy storage systems, which can make a significant contribution to stabilising the energy system. Regrettably, regulatory barriers prevent their full exploitation. For instance, an explicitly desired higher electricity consumption during periods of abundant wind and solar power can lead to increased grid usage fees for businesses. This should be reversed: wherever technically feasible, electricity consumers deviating from the average consumption behaviour should pay lower grid fees as they reduce grid stress. Moreover, the instrument of interruptible loads urgently needs to be reinstated to offer an additional option for stabilising the electricity grid in the event of issues. This measure involves temporarily shutting down or reducing electricity-intensive industrial processes when the physical network condition demands it.

Coal-fired power plants should be kept as a backup if the expansion targets for renewable energies are not met as legally stipulated. Keeping coal power plants available can help mitigate unexpected strains on energy supply in the future. At the same time, it is essential to apply CO₂ capture and storage technology not only within the energy-intensive chemical industry but beyond that as well.

The energy costs burdened the economy even before the crisis significantly. Although electricity and gas prices have recently fallen, the price level severely jeopardizes international competitiveness. Even with the gas and electricity price brake, energy costs for energy-intensive processes and services are significantly above procurement costs in France or the USA. To sustainably reduce its energy costs, Germany must primarily massively expand its supply. The principle should apply: power plant capacities are only shut down when other weather-independent services are available.

Key actions for a stronger energy infrastructure in Germany

Market-focused solutions and European integration are pivotal for energy transitions.

German companies require hydrogen in large quantities in order to achieve their operational climate protection goals. For hydrogen to become widely available quickly, uniform European regulations are necessary, especially for CO₂-neutral and green hydrogen. Regulatory requirements, for example regarding the origin of the electricity used, should be kept as streamlined as possible, at least during a transitional period, so as not to slow down market ramp-up.

Additionally, companies need broad access to physical hydrogen supply. Until this is guaranteed, companies should achieve their operational climate neutrality goals through the accounting acquisition of hydrogen during the transitional period. Therefore, a market is needed where hydrogen is accounted and traded with its certified CO₂-neutral property. This will strengthen and accelerate the ramp-up of the hydrogen economy.

In a broad market ramp-up, the economy's demand for CO₂-neutral hydrogen and its derivative products will far exceed Germany's and Europe's production capacities. Imports, similar to fossil fuels, will be necessary in the long term. Here, swiftly and sustainably established joint hydrogen partnerships with potential supplier countries and uniform or at least comparable standards can be of great benefit.

Systematically increasing energy efficiency is in the self-interest of businesses: After all, this allows them to achieve their operational climate protection goals while simultaneously saving costs by avoiding energy consumption. Efficient energy use is thus an integral part of rational operational energy management and a driving force behind innovation and new business models. Simple measures have already been implemented in many companies due to Germany's high energy prices over the years. However, future measures require substantial investments due to rising marginal costs and are comparatively complex in operational implementation.

The Federal Government's efficiency policy must align with this starting point. Effective instruments include market-based incentives, technological openness, and the economic reward of operational successes. This includes promoting knowledge exchange, as has been successfully practised for years in efficiency networks. However, policymakers should avoid bureaucratic proof and reporting obligations for businesses and mandatory implementation requirements.

State energy-saving targets in the area of final energy consumption are largely rejected by businesses. After all, for achieving operational climate protection goals, it does not matter whether CO₂ is avoided through energy savings or investments in renewable energy. Therefore, the German Chamber of Commerce and Industry (DIHK) fundamentally opposes legally binding final energy-saving targets. Political efficiency targets in the area of increasing energy productivity are more sensible.

The European Union wants to reduce dependence on imports for crucial key technologies tied to digitalization and transformation. Energy policy alone cannot achieve this. To ensure relevant companies establish themselves and continue producing in Germany, it's necessary for policy measures to improve conditions for industrial production overall. This includes a secure and increasingly green energy supply at competitive prices, sufficient availability of skilled workers, and modern infrastructure.

With the market ramp-up of electrified and digitized technologies and investments in networks, electrolyzers, and production capacities for renewable energies, Europe's demand for necessary raw materials will rise significantly. At present, the import of essential raw materials and domestic mining are being hindered by increasingly cumbersome planning and approval processes, as well as new reporting obligations. Simplifying and accelerating approval processes for domestic raw material extraction, diversifying raw material imports outside Europe, and providing additional incentives for investments in production capacities would bolster Germany’s strategic economic sovereignty.

Policymakers should also advocate for the alignment of standards along the raw material supply chain to ensure fair competition conditions. Expanding recycling capacities can also help reduce dependencies on raw materials, an area that requires more focused policy attention.

Innovations and new technologies are crucial for successful energy and climate policies. For example, it will not always be possible to completely avoid CO₂ in all processes. Thus, new solutions are needed for the capture, storage, and use of CO₂ (CCS/CCU). Innovations in climate protection should, therefore, be encouraged through technology-neutral funding measures. Bureaucracy-free, swift, and digitised funding processes are, however, necessary for the support options.

In addition, policymakers should strengthen knowledge transfer between businesses and science, for instance by enabling applications to be tested early on in practice and real-world laboratories. In the energy and climate sector, innovations must be quickly transferred into operational practice to achieve political goals. Regulatory freedoms in the form of real-world laboratories are especially important for SMEs and start-ups. Furthermore, the federal government should stabilise proven funding programmes such as ZIM at a high level and ensure uninterrupted application and approval processes.