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Climate Neutral
Germany – From Target
Setting to Implementation

Client

Agora Energiewende

Year

2024

Partner

Öko-Institut, Wuppertal Institut, Universität Kassel


In our 2021 study Climate Neutral Germany, conducted on behalf of Agora Energiewende, Agora Verkehrswende and the Climate Neutrality Foundation, we examined for the first time whether and how Germany can achieve climate neutrality. At the time, the results showed: a reduction in greenhouse gases in Germany of 65 percent by the year 2030 and climate neutrality by 2045 was achievable and technically feasible.

But how are things looking now, three years on?

Germany has moved from the climate policy target-setting phase into the implementation phase and is facing tough challenges: How can industry competitiveness be strengthened? How can the climate-related refurbishment of existing buildings and sustainable mobility be made affordable for all?

In order to answer these questions, we updated our study. Climate Neutral Germany – From Target Setting to Implementation.

The scenario with comprehensive figures: How can Germany achieve net zero?

Our scenario takes its direction from the following:

  • Convenient/low-cost and reliable energy supply: Renewable energies are being developed, the demand for electricity made more flexible and the grid connection of wind offshore installations optimised in terms of cost.
  • Impulses for a competitive economy: Investment in climate-neutral processes and products help the economy out of crisis and enable Germany as an industrial location to take a significant role in the global growth markets, around three quarters of which are based on the transition to climate neutrality.
  • More accessible and cleaner mobility: Through the expansion of the public transport infrastructure, mobility has improved for citizens and with it the attractiveness of rural areas, including for businesses. A general mobility fund and targeted investment support for the acquisition of e-cars for people on low incomes assure affordable mobility for all.
  • Participation in housing from the whole of society: The climate-neutral refurbishment of buildings leads to an increase in value of the building stock. A differentiated range of funding options protects home owners and tenants from disproportionate rises in costs. Additional and affordable housing will also be created.
  • Productive and resilient agriculture and forestry: Agriculture will make a significantly larger contribution to climate neutrality than it does today because the substantial sink in their greenhouse gas emissions will allow more CO2 to be captured on agricultural fields and the production of sustainably cultivated biomass for the bio-economy.

What investment will this require?

  • According to our scenario, up to the year 2045, Germany will invest an average of 540 billion euros per year – around 11 percent of annual economic output.
  • Three quarters of this investment is already planned investment for regularly occurring replacement and modernisation that would also occur outside of a climate-neutral scenario.
  • The remaining quarter is additional investment for climate protection measures. This represents additional spending for the procurement of climate neutral technologies in comparison with fossil reference technology – for example, the higher price of a heat pump compared to a gas heating system. These climate protection investments amount to 3 percent of annual gross domestic product.
  • But: (Additional) investment does not equal (additional) costs. So, for example, despite the currently high purchase costs, many electric cars are already cheaper than petrol and diesel vehicles if you take into account the lower running costs across the whole life span of the vehicle.

The following instruments have been made available to enable the achievement of climate neutrality:

  • Price-based approaches (e.g. CO2 pricing)
  • Market regulation, restriction of market access for environmentally harmful technologies
  • Infrastructure provision, in particular, for climate-neutral energy production and the restructuring of the transport system
  • Financial support for climate-neutral innovation through subsidies

To ensure a targeted, cost-efficient and fair instrumentation a mix of all instruments should be used. Our study gives concrete suggestions for the individual areas.

Our approach

Back in 2018, we were already examining the pathways available to Germany on the road to climate neutrality, in a much noted study for the BDI. In 2021, the Climate Neutral Germany study followed, where we examined the question of which concrete measures Germany might use to achieve net zero greenhouse gas emissions by the year 2045.

This study update not only brings the technical-economical modelling up to date, but also shows the exact instruments and investments required for the implementation phase.

Together with our partners, the Öko-Institut, the Wuppertal Institute and the University of Kassel, we examined the energy industry, industry, buildings, transport, agriculture as well as land use, changes in land use and forestry (LULUCF). Prognos was responsible for the overall project management and for the technical modelling of the instruments in the energy, buildings and non-energy intensive industry sectors.

Links and downloads

To the study (PDF in German)

To the previous study, in German (2021)

More info on the Agora website (in German)

Project team: Elias Althoff, Hans Dambeck, Dr Andreas Kemmler, Sven Kreidelmeyer, Paurnima Kulkarni, Saskia Lengning, Sebastian Lübbers, Dr Alexander Piégsa, Nils Thamling, Dina Tschumi, Minh Phuong Vu, Aurel Wünsch, Marco Wünsch, Inka Ziegenhagen

Latest update: 30.10.2024

Contact

Press enquiries are to be addressed to Agora Industrie: presse@agora-industrie.de | +49 30 700 1435-112

What are the most important differences to the previous study?

Instruments

The scenario is linked to a comprehensive package of measures that identifies a balanced mix of policy instruments that enable the necessary investments and thus ensure social balance.

Investments and funding requirements

The current study is the first to calculate the necessary private and public investments and derive the funding requirements.

Entry into net negative emissions

In order to limit global warming to 1.5 degrees, it is important that industrialised countries not only become climate-neutral, but also achieve negative emissions in the long term. This scenario shows how this can be achieved as early as 2045.

Biomass

Biomass is a scarce resource. In addition, the utilisation and cultivation of biomass lead to greenhouse gas emissions from land use (LULUCF). It is therefore important that biomass is utilised as efficiently as possible – i. e. material use takes precedence over energy use. By increasing the utilisation of residual and waste materials, biomass will be cultivated more sustainably than it is today with a constant supply. Biomass is primarily utilised as a material, e. g. as a sustainable source of carbon for the production of plastics.

Greater resilience through reduced dependence on imports

In the electricity sector, the hourly exchange with other countries has increased. In total – i. e. netted across all imports and exports within a year – net imports were significantly reduced compared to the last scenario and other current long-term energy scenarios. The current scenario thus shows a way in which security of supply can be guaranteed in Germany even without high imports in winter.

Robust through sensitivity analyses

In order to make the scenario even more robust, various sensitivities were used to analyse the effects of individual measures being implemented more slowly or not to the extent required – such as a broader application of carbon capture and storage (CCS) along a CO2 transport network, lower remediation activity or a weakening of the forest as a carbon sink due to storms and droughts.

Do you have questions?

Your contact at Prognos

Inka Ziegenhagen

Senior Project Manager

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Marco Wünsch

Principal

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