Energy policy
Internationale Energieagentur sieht Energiewende als zentralen Wachstumsmotor für Deutschland © Adobe Stock / reisezielinfo

International Energy Agency: Germany’s energy transition is a key driver of growth

In its Energy Policy Review of Germany, published in early April, the International Energy Agency (IEA) highlights the energy transition as a central driver of energy security and economic competitiveness.

Germany has already made significant progress: the expansion of wind and solar power, along with an expansion of the electricity grid, has gained momentum. The coal phase-out is well underway. Today, more than half of the electricity consumed in Germany is consistently sourced from renewables. By 2030, that share is expected to rise to 80%. 

The challenge now is to safely steer this new energy system – building storage, continuing the rapid expansion of renewables, and extending the transition beyond electricity to include the heat sector. This, according to the IEA, will reduce dependence on energy imports, enhance Germany’s competitiveness, and make it more climate-friendly. However, the agency also calls for stronger measures in key areas such as reducing emissions in the transport sector and setting out a roadmap for phasing out natural gas in power generation and industry to meet the 2045 climate neutrality target.

The IEA outlines ten key recommendations in its country report for Germany. At the heart of these is the call for long-term, stable, and reliable legal, political, and economic frameworks – particularly for investments in renewables, heat pumps, district heating, and e-mobility.

Given that German consumers currently face some of the highest electricity prices in Europe, the IEA urges future energy policy to keep affordability in sharp focus. It recommends reducing electricity taxes and swiftly addressing high grid fees. To better integrate renewable energy, the IEA advises Germany to accelerate the rollout of smart meters, rapidly scale up electricity storage, and establish local signals within the power system to better detect and manage regional grid bottlenecks. 

For the buildings sector, the report stresses the importance of energy efficiency, electrification of distributed heat supply (through heat pumps), and the expansion of low-carbon district heating networks. The IEA therefore calls on Germany to continue and refine its current policies in the heat sector – and to communicate them clearly to the public.

According to the IEA, Germany is already well-positioned in the area of hydrogen thanks to its National Hydrogen Strategy, import strategy, the H2Global auction model, the planning of a core hydrogen network, and its innovative financing mechanisms.  Going forward, however, it says that demand for low-emission hydrogen must be stimulated – through public procurement, targeted Carbon Contracts for Difference (CCfDs), and the development of green standards for industrial materials.

Founded in 1974, the IEA is one of the world’s leading energy organisations, providing globally respected data, analysis, policy recommendations and practical solutions to help countries ensure a secure and sustainable energy supply. Every five to six years, it reviews the energy policies of its member states through in-depth country reports.

You can access the full IEA country report for Germany, including all ten recommendations, here. A German-language PDF version is available for download here.

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