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Accelerated climate protection does pay off

Client

INSM Initiative Neue Soziale Marktwirtschaft GmbH

Year

2023


An accelerated expansion of renewable energy sources and the increased use of efficiency technologies in industry reduce wholesale electricity prices and increase economic growth. This is the result of our short study for the Neue Soziale Marktwirtschaft Initiative (INSM).

Every stimulus has a positive effect on economic performance

If the expansion of renewable energies and the implementation of efficiency measures are accelerated, the amount of fossil fuel that has to be imported is decreased. In terms of efficiency measures in industry, fossil-fuel applications are often replaced with more efficient power applications. Therefore, while electricity consumption is increasing, through the expansion of renewable electricity generation this also means that wholesale prices will fall by 2030.

An acceleration on this scale will require additional investment in plants and buildings. But these measures also “pay off” economically – in addition to their necessity for climate protection. In the simulation period up to 2030, supported by lower electricity prices and reduced energy imports, the German GDP increases by around 1.7 euros for each additional euro invested. If all measures are implemented in 2030, the gross added value is four percent above reference development level. The prerequisite for this: the necessary additional work can (primarily) be realised by extending the working hours.

As a result, the acceleration measures will reduce the price of electricity and energy source imports, and increase investment. Every stimulus has a positive impact on economic performance in Germany.

Increased investment in renewable energy & energy efficiency

In order to achieve the goal of climate neutrality in Germany by 2045, the expansion of renewable energies and the implementation of efficiency measures in industry will have to be accelerated. This will require additional investment of around 400 billion euros by 2030. Our short study for the INSM examined whether these investments are also worthwhile in economic terms.

We evaluated existing energy scenarios and adapted them to current price developments. The short study compares a “reference scenario” and a “target scenario” with accelerated development. The “interim target year” of 2030 was selected as the time scale, a step on the way to climate neutrality in 2045.

For this short study, our team used two models: our electricity market model was used to calculate the development of wholesale electricity prices. The economic impact was measured using our macroeconomic model.

Links and downloads

On the INSM’s website you will find:

The study (PDF, in German)

Further information on the study (in German)

Project team: Dr Almut Kirchner, Dr Andreas Kemmler, Marco Wünsch, Jan Limbers

Last update: 6.3.2023

Do you have questions?

Your contact at Prognos

Dr Almut Kirchner

Partner, Director

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Marco Wünsch

Principal

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Jan Limbers

Senior Expert

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