Looking Back 2022: The Energy Crisis
Looking Forward 2023: The Threat of Recession and Its Impact on Energy Use
Without a doubt, the most transformative climate change event in Germany this year was the energy crisis – triggered by Russia’s invasion of Ukraine. This initial conflict and Putin’s refusal to back down in the months since brought about a huge increase in public support for further reducing Germany’s reliance on fossil fuels and foreign energy sources.
Although Germany was one of the first countries to embrace a transition to renewable energy sources with the goal of becoming carbon neutral by 2050, the country has quickly become more dependent on renewable energy much faster than expected, which brings both opportunities and challenges.
The German energy grid has become increasingly unstable as a result of the increased reliance on renewables, with frequent blackouts and brownouts occurring throughout the country. This has been caused by the fact that wind and solar energy sources are often unable to meet the electricity demand. Additionally, the cost of renewable energy has become increasingly expensive, leading to higher energy bills for consumers.
The German government has implemented a number of policies to try to address the energy crisis, including increasing the number of energy storage facilities and investing in new renewable energy sources. On 8 July 2022, the German government led by the coalition of the SPD, Green Party, and FDP passed the largest energy policy amendment in decades. The €99 million package includes amendments to five laws that will accelerate the expansion of renewable energy.
So far, these measures have not been enough to solve the crisis. As a result, Germany is now facing an uncertain energy future, with no clear solution in sight; however, its commitment to its energy transition goals including a phase-out strategy for coal and gas remains strong.
Two honorable mentions for the biggest climate change moments in 2022 include:
- The first World Conference on Climate Change & Sustainability (Climate Week 2022) was held in Frankfurt.
The globally-noted event brought together representatives from all levels of government, the private sector, and civil society to discuss and develop solutions to climate change – including everything from state-of-the-art technological innovation to ecosystem management. Designed to build bridges between various stakeholders, the event’s discussions centered around the latest policy initiatives and technological solutions for climate change, as well as the role of Germany in leading the global response to the climate crisis.
The event will be hosted again in 2023 in Rome, Italy.
- Massive public demonstrations
Thanks to the coordination of the Fridays for Future organization, more than 280,000 people took to the streets in Germany in support of the 11th global climate strike. The protests brought national and global attention to demands for concrete climate protection measures like the expansion of renewable energy and cost reductions for public transportation.
Looking ahead to 2023: A test of political willpower during an energy crisis and recession
Looking ahead to 2023, the main theme that is top of mind for many Germans is the very real risk of economic recession – coming on the back of steep increases in energy prices during a harsh winter.
This expected stagflation – a difficult-to-treat phenomenon where the country’s GDP contracts while inflation remains at a near-record high – will lead to a stark rise in uncertainty and instability, especially in the more vulnerable regions and communities which were already lagging behind the rest of Germany’s historically powerhouse economy.
“We’re going through a serious energy crisis, one that is slowly turning into an economic and social crisis,” said Robert Habeck (Greens).
Amidst these conditions, Germany’s leading political coalition will face immense pressure to backtrack on bold climate goals and investments in favor of shorter-term business-friendly policies and economic relief – and falling back on high-emission energy sources like coal.
Thus, the biggest test for Germany in 2023 will be navigating economic concerns while also staying on track with its renewable energy transition goals and investments – the best path for a country that is a leading voice for economic growth and climate transition in the EU, according to Habeck (Greens).
We predict Germany will bet big on an investment strategy to avert disaster – including a fund for the climate and energy transition and a newly-announced €200 billion economic aid package meant to buffer households from the worst of energy price increases.
This Post was submitted by Climate Scorecard Germany Country Manager Alex Savas