German economy recovers from pandemic, but must change quickly for effective climate protection | D+C


The German economy is recovering from the pandemic. But that will have to change significantly in a short time if the country is to meet its tougher climate targets.

Covid-19 has had significant impacts on the German economy. The country’s gross domestic product (GDP) fell by 4.6% in 2020, the first Corona year, but the economy started to recover in 2021, with GDP increasing by 2.8%. In 2021, the unemployment rate averaged 5.7%. Strong government support, including for job retention and furlough schemes, has helped.

Since it took less money than expected to fight the Corona crisis, the new German government wants to allocate 60 billion euros of Corona funding to a transformation and climate fund. In fact, the challenges of German climate policy are so enormous that every penny is welcome. After the Federal Constitutional Court struck down the original climate law last year, Germany had to tighten its emissions targets. The new target is to reduce greenhouse gas emissions by 65% ​​by 2030 compared to 1990. By 2045 at the latest, Germany should have a climate-neutral economy (see the article by Hans Dembowski on our D+C/E+Z platform).

At present, however, the country is not on the right track. In the short term, emissions have decreased due to Corona. But from 2021 to 2023 they are likely to be too high, as new Federal Minister for Economic Affairs and Climate Action, Green Party member Robert Habeck, predicts in his assessment of the current state of climate action in Germany. The measures taken so far are insufficient in all sectors, and the pace of emission reductions must more than double by 2030, according to the Habeck program presented in January.

In order to achieve the new climate objectives, the new government wants, among other things:

  • making two percent of the country’s land available for wind power – four times more than before,
  • make solar energy mandatory on new tertiary buildings,
  • accelerate the production of green hydrogen,
  • create 1 million public charging stations for electric vehicles by 2030 and
  • speed up procedures for the construction of renewable energy installations.

Major business groups largely agree with these plans. They know that Germany is facing a huge structural change. What they expect from political decision-makers are above all framework conditions that allow them to be competitive at the international level. These include reliable infrastructure, low energy and electricity costs, and less bureaucracy.

Environmental organizations generally approve of Habeck’s plans, in particular the accelerated expansion of renewable energy. But they also say Germany’s climate targets still fall short of the Paris Climate Agreement’s 1.5-degree target. Fridays for Future, the climate strike movement, also argues that the measures do not go far enough.

The implementation of the government’s plans is already meeting resistance. For example, some federal states have regulations that block the planned expansion of wind power. In many places, residents are protesting against the construction of new power lines or wind turbines. In response to this, Robert Habeck pointed out that this is not just a technical debate, but a debate with important social and cultural aspects.

What policymakers and business leaders agree: The transition to greater sustainability and climate protection holds potential for conflict, but also great opportunity. Germany could develop innovative solutions likely to interest other countries. This could guarantee the creation of value, jobs and long-term prosperity. But it’s still a long way off.

German Federal Ministry for Economic Affairs and Climate Action: Current status of Germany’s climate action.

Jörg Döbereiner is a member of the editorial staff of D+C Development and Cooperation / E+Z Entwicklung und Zusammenarbeit.

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