Germany Accused of Ditching Climate Targets as It Scraps Renewables Mandate

After two years of contraction, the economy is projected to stabilize with modest growth of around 0.3% in 2026, driven by public investment and falling energy costs, though risks from trade tensions persist.

Deindustrialization: The High Cost of Energy Policies

Germany’s industrial sector, which accounts for 21% of GDP, has been hit hard by soaring energy prices, leading to warnings of “creeping deindustrialization.”

A 2024 survey by the German Chamber of Commerce and Industry (DIHK) found that 51% of large companies and 45% of high-energy users are considering relocating production abroad due to unreliable and expensive energy supplies.

The chemical and heavy industries, once global leaders, are in rapid decline, with factories facing closure and reduced hours.

High energy costs—Germany has some of the world’s highest electricity prices, averaging 38 euro cents per kWh for households in 2025—have eroded competitiveness, with EU industrial prices twice those in the US and 50% above China’s.

Over the last decade, electricity prices have risen sharply, from around 16 euros/MWh pre-crisis to peaks of 235 euros/MWh in 2022, stabilizing at higher levels (about 100 euros/MWh in 2025).

This has fueled a “factory exodus,” with companies like Volkswagen signaling potential plant closures amid overcapacity and competition from China.

The Nuclear Phase-Out: A Costly Legacy

Germany’s decision to phase out nuclear power, completed in 2023, has exacerbated these issues. The shutdown of 17 reactors between 2011 and 2023 removed 800 TWh of zero-carbon electricity—equivalent to two years of national demand—leading to increased reliance on coal and gas.

This has resulted in 733 million tonnes of additional CO₂ emissions, 19,200 premature deaths from air pollution, and €57 billion in financial costs.

Studies estimate the phase-out added 36.2 megatons of CO₂ annually and caused 1,100 pollution-related deaths per year, as fossil fuels filled the gap.

One analysis found that postponing the phase-out in 2023 reduced European gas-fired generation by 2.9 TWh and German power prices by €9/MWh.

Public opinion has shifted; polls show support for extending nuclear operations amid energy security concerns, but the phase-out remains a point of pride for some, rooted in safety fears post-Fukushima.

However, it has left Germany importing electricity and facing higher emissions, contradicting Net Zero goals.

At the Bottom? Reforms and the Path Forward

By early 2026, Germany’s economy is at a low point, with growth at just 0.2% in 2025 and projections of 0.3-1.0% for 2026.

Unemployment hovers above 6%, and inflation eases to around 2%.

The rise of the far-right AfD in eastern states, fueled by economic malaise and anti-green sentiment, underscores the political fallout.

The Merz government is pivoting with reforms: dropping the renewable heating mandate, introducing a “green oil and gas quota,” ending subsidies for small solar systems, and allocating €100 billion from a €500 billion fund for energy infrastructure.

A 10-point plan emphasizes market-oriented renewables support, grid modernization, and affordable energy to halt deindustrialization.

Offshore wind auctions will shift to Contracts for Difference in 2026 to attract investment.

These changes signal a pragmatic turn, prioritizing economic recovery over strict green mandates. While emissions reductions continue—renewables hit 55% of electricity in 2025—Germany aims for 80% by 2030, though some targets, like 100% by 2035, may be scaled back.

As one X post noted, “Germany is done committing economic suicide to impress Brussels,” reflecting a sentiment echoed in public discourse.

Whether these reforms mark a bottom and lead to recovery remains uncertain, but they highlight the Net Zero movement’s collision with economic realities in one of the world’s industrial powerhouses.

The once poster child for the green movement is possibly becoming the poster child in the energy security movement, which is now a major political rallying call around the world.

As Stu Turley, the Energy News Beat host, has often said, “Energy Security starts at home, but your Energy Dominance comes through your exports,” and Germany won’t be exporting any time soon. Do you think California, New York, and the other Blue States will learn from Germany this time around?

Sources: @MarioNawfal on X, cleanenergywire.org, aoshearman.com, gleisslutz.com, cleanenergywire.org, iris-france.org