Germany has made significant progress in its transition towards a sustainable energy future. The Energiewende, or energy transition, has seen Germany reduce its greenhouse gas emissions by 48 percent since 1990, achieving a 3 percent reduction year-on-year in 2024 to 656 million metric tons of CO2 equivalents.
Notably, about 80 percent of this reduction occurred within the energy sector, underscoring the effectiveness of renewable energy policies. In contrast, emissions in other sectors have not mirrored this success, with industrial emissions increasing due to certain economic activities.
The share of renewable energy in Germany’s electricity consumption reached 55 percent in 2024. The installation of photovoltaic systems set a record with 16 gigawatts (GW), highlighting a strong uptake driven by supportive climate policies. Approvals for onshore wind energy projects also saw an increase, tripling in new capacities to nearly 13 GW compared to two years prior, suggesting an impending rise in onshore wind energy contributions.
Despite the success in the energy sector, progress in demand sectors such as buildings and transportation has been sluggish. This stagnation is evident in the building sector’s emissions, which saw only a marginal 2 million ton reduction in CO2 equivalents, largely due to milder weather rather than structural changes or improvements. Similarly, in the transportation sector, emissions only saw a 1 percent decrease, falling well short of set targets.
The economic landscape in Germany reflects this dichotomy between energy sector growth and broader economic challenges. The Gross Domestic Product (GDP) experienced an estimated decline of 0.1 percent in 2024, due to both cyclical and structural factors, including diminished domestic and international demand across key sectors like automotive. This economic context has contributed to uncertainties in investment, particularly in climate-neutral technologies despite falling electricity prices.
Energy prices in Germany in 2024 exhibited a complex pattern. Wholesale electricity prices decreased compared to 2023 but saw mid-year increases due to rising gas prices. Notably, increased volatility characterized the market with periods of extremely low or negative prices linked with high renewable generation, contrasted by price peaks during low renewable output periods.
Germany’s conventional electricity generation fell sharply in 2024, with a notable 16 percent reduction in coal generation driven by increased renewable output and energy imports. Despite key technological advancements and strategic policy implementation, emissions from conventional energy generation still account for a significant 183 million metric tons of CO2 equivalents, exhibiting a 9 percent decline from the previous year.
Strategic investments and policy interventions are critical for maintaining momentum in the Energiewende. Reducing grid tariffs and electricity taxes, coupled with climate protection agreements and incentives for green markets, can provide much-needed innovation impulses for the economy. Such measures, along with adjusting fiscal policies and establishing future-oriented compacts between various levels of government, could ensure stable financing for sustainable advancements in all energy-related sectors.
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