• Germany achieved a record reduction in GHG emissions in the energy sector in 2024. Yet, challenges remain.
• The nation needs to build confidence among households and businesses to invest more in climate-friendly technologies.
• It should provide incentives and implement relevant measures to expand renewables in the transport and building sector.

A new study by Agora Energiewende notes that Germany reduced its greenhouse gas (GHG) emissions by 3%, or around 18 million tonnes, compared with the previous year to a total of 656 million tonnes of CO2.

The energy sector in Europe's leading manufacturing hub stakes claim to this achievement, with around 80% of the emission cuts and energy prices plummeting by 18% on average, helping households and businesses.

"Climate protection measures taken in recent years are increasingly having an effect on the electricity sector,” said Simon Müller, director of Agora Energiewende Germany. “With a significant increase in renewable energy and the positive trend in grid expansion, Germany is paving the way for a successful transformation in all sectors. At the same time, the country is increasingly benefiting from falling emissions and cheaper prices on the electricity exchange."

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The study attributes these achievements to the following factors:

• Germany shut down coal plants, about 16% of coal capacity retired;
• 55% of the country's electricity came from renewables; and
• Increased electricity imports, almost half of which was from green energy sources.

However, there is a lack of progress in the areas of buildings and transport.

Issues in Buildings and Transport

Despite a sharp decrease in emissions in the energy sector, other sectors, predominantly buildings and transport, lagged behind in reducing emissions.

In the buildings sector, emissions only dropped by 2 million tonnes, mainly due to mild weather. Investments in climate technologies fell sharply, and renovation rates for energy efficiency hit historic lows.

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Meanwhile, in the transport sector, emissions went down by only 1%, passenger car use increased and electric car registrations saw a significant drop (26%).

Overall, the nation missed its sectoral emission targets by 19 and 9 million tonnes in the transport and building sectors, respectively.

These sectors are grappling with a lack of confidence among households and businesses to invest in climate-friendly technologies. Also, in recent years, high energy prices have dampened consumers' confidence to switch to greener solutions, even though power costs have stabilised.

To overcome these challenges, the government should firm up its measures to encourage more investments by providing incentives for adopting green technologies, expanding renewables like solar and wind power, supporting industries and the economy by reducing power taxes and reforming grid charges, as well as implementing measures such as CO2-based taxes and incentives to reduce car emissions.

Otherwise, Germany will miss European climate targets under the Effort Sharing Regulation (ESR) and face fines or have to purchase emissions allowances, costing the country billions of euros.

"Our latest analyses clearly show that climate protection constitutes the basis for a competitive economy, increases energy security and can strengthen social inclusion. For the coming legislative period it is therefore crucial that Germany stays on the ball when it comes to climate and energy policy. The prerequisites for this are an effective policy mix and a solid financial basis for the transformation," said Müller. "Climate protection remains a generational task for which courageous political decisions and resolute, non-partisan cooperation between businesses, civil society and politics are now needed more than ever."

To learn more about the study, click here.

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Source: Agora Energiewende