German industry lobby warns energy transition could cost 5.4 trillion euros by 2049

The German Chambers of Industry and Commerce said that the current German energy transition strategy would cost up to 5.4 trillion euro ($6.3 trillion) in 2049. This could be a heavy burden on businesses and households, and reduce their competitiveness.

Berlin wants to achieve climate neutrality by 2045 by covering 80% of its energy needs with renewable sources by 2030. Electricity prices are among the highest in Europe despite the strong growth of wind and solar power in recent years.

With the current policy the energy transition will not succeed. "It risks pushing energy-intensive industries overseas while weakening Germany’s economic base," DIHK president Peter Adrian said in an official statement.

A study commissioned by DIHK by Frontier Economics showed that the average annual private investment in energy and industry, building and transport, would have to rise to 113-316 billion euros in 2035, from 82 billion euro in 2020-24.

The cost of energy systems between 2025-2049 is estimated at 4.8-5.5 trillion euro, which includes up to 2.3 trillion euro for imports and as much as 1.2 trillion euro for grid costs.

The study, released ahead of the government's review of energy demand plans and transition strategies, calls for a shift towards cost-efficiency, international coordination, and stronger carbon trading through lighter regulation, and an expanded use of gas networks to transport hydrogen and decarbonised gases.

The report estimates that such measures could result in savings of up to 910bn euros by 2050. Total savings would reach 1 trillion euros, if targets for climate neutrality were relaxed. $1 = 0.8542 Euros (Reporting and editing by Alex Richardson; Riham Alkousaa)

(source: Reuters)