Market-Based Competition is Key to a Successful Energy Transition

Germany's complex landscape of political goals, regulations, and instruments reduces the importance of the market. The energy transition faces increased bureaucracy and costs, making economic progress slower.

The German economy faces strain due to high energy costs, hindering its global competitiveness.

According to the experience of many businesses, the normative framework, with highly detailed regulations, extensive reporting and verification obligations, or unsynchronised procedures, complicates the practical implementation of the energy transition, tying up urgently needed capacities and resources.

Complex subsidy programmes and burdensome bureaucracy should be significantly simplified, and application procedures and verifications should be harmonised. In other areas as well, such as energy tax concessions or plant registrations in the Market Master Data Register, application and verification processes should be standardised, synchronised, and ideally organised via a central data platform. Digitalisation can play an important role here. At the same time, the data security and sovereignty of companies must always be fully guaranteed.

Rather than focusing on detailed technological specifications, policymakers should pave the way to greenhouse gas neutrality with technology-open standards and flexible solutions, thereby allowing for the consideration of individual operational conditions. Particularly in the building sector, the path to climate neutrality is determined by an individual composition of emission-free energy supply and the necessary level of efficiency required for it. However, this level of efficiency should not be dictated in detail. This is especially true for non-residential buildings, where energy consumption cannot be reduced arbitrarily, as it is determined by operational and production-specific parameters.

The economic location derives strength from the combination of high innovation capacity paired with strong environmental responsibility for optimising its processes and products. For this reason, the Federal Government should focus on entrepreneurial spirit instead of bans and mandates. With voluntary energy efficiency measures, German businesses have already significantly reduced their energy usage per euro of value added. Strengthening operational self-supply and improving frameworks for cross-company supply models are important measures in this regard. Flexibility in finding suitable solutions should be guaranteed in an increasingly volatile energy system. To make the energy transition a success, further innovations and new technologies are required for all parts of our energy system – from generation to transport, storage, and consumption sectors. Carbon Management solutions (capture, transport, storage, and usage of CO₂) are a key aspect. Moreover, further open-ended research and development programmes are necessary. With new technologies, not only can the energy transition be completed, but they also offer economic future prospects in rapidly growing global markets.

To ensure Germany remains an attractive business location, the quality of energy supply must be upheld at the highest standard.

Specific emphasis should be placed on accelerating the expansion of energy networks and regularly updating the regulatory framework for system services, ensuring non-discriminatory access to all market participants and technologies.

A secure and efficient energy supply can be better achieved in the European network than through national solo efforts. Steps towards completing the energy internal market and reducing national special paths are therefore always advantageous for the economy as a whole. The energy internal market should be strengthened by pursuing market-oriented solutions together during the restructuring of energy systems and by consistently expanding European networks.

Free price formation is of great importance to ensure that the most economically efficient capacities across Europe are used to balance supply and demand among producers, consumers, and storage systems. The EU should collectively take responsibility for security of supply. A joint procurement strategy for hydrogen, ensuring the avoidance of new dependencies on individual supplier regions, is meaningful – the guiding principle should be diversified European gas procurement. The expansion of networks should be decisively advanced cross-border and for all energy carriers, particularly for hydrogen. Opportunities for the transport and storage of CO₂ should also be created.

To reduce their greenhouse gas emissions in line with the ambitious European climate targets, companies, especially those in the industrial sector, rely on a secure and price-competitive supply of renewable energy. Therefore, its expansion is a high priority for the economy and should be more resolutely promoted by policymakers as a matter of public interest. Environmental protection regulations originating from EU legislation should be simplified. This will also eliminate resulting hurdles, such as lengthy planning and approval procedures.

The EU plays a central role in establishing a liquid and functioning hydrogen market. The regulatory framework should be designed to ensure that hydrogen, as an energy carrier and raw material, can be procured as quickly and reliably as possible, in large quantities and at competitive and calculable costs by all companies. The rapid transition to climate-friendly hydrogen—according to the majority of the economy—requires transitional technologies and timeframes. Additionally, policymakers should advocate for uniform definitions of hydrogen and maintain consistency in their legislative texts to avoid conflicts and ensure planning security. The infrastructure expansion associated with the market ramp-up of hydrogen is essential. Whether it involves pipeline transport from supplier countries or "H2-ready" LNG infrastructure—swift implementation is necessary in any case.

Germany should better coordinate its energy policy with its European neighbours. Cross-border cooperation in the European internal market brings efficiency gains.