In recent years, Germany has been at the forefront of the global energy transition, championing ambitious green policies and aggressively phasing out both coal and nuclear power. However, as the country grapples with energy shortages and growing instability in its power grid, natural gas is emerging as a critical resource to keep the lights on and maintain industrial output.
Germany’s energy mix has undergone a dramatic transformation over the past two decades. The country’s Energiewende (energy transition) aimed to replace fossil fuels and nuclear power with renewables such as wind and solar. By 2024, wind and solar together accounted for nearly 55% of Germany’s electricity generation, while coal had dropped below 25%, and nuclear power was phased out entirely in 2023. Natural gas, once a minor player, now represents around 20% of the energy mix and is poised to grow further as a flexible backup for intermittent renewables.
The Impact of Green Energy Policies
While Germany’s climate ambitions have been lauded internationally, the rapid shift away from traditional baseload power sources has exposed significant vulnerabilities. The intermittency of wind and solar, combined with the loss of nuclear and coal plants, has led to periods of power shortages and price spikes. Major industrial sectors—long the backbone of Germany’s export-driven economy—have warned of production cuts and even relocation due to unreliable and expensive energy supplies.
The energy crisis has also taken a toll on Germany’s fiscal health. To cushion households and businesses from soaring energy bills, the government introduced massive subsidies and bailouts, straining public finances. At the same time, tax revenues from traditional industries have declined, compounding budget deficits. Critics argue that the rush to decarbonize—without ensuring a stable and affordable power supply—has undermined the very economic foundations that underpinned Germany’s prosperity for decades.
A New Role for Gas
In response to these challenges, German policymakers are re-evaluating the role of natural gas in the energy system. LNG imports have surged, and new terminals are being built to reduce reliance on Russian pipeline gas. Gas-fired power plants, once seen as a temporary bridge, are now recognized as essential for grid stability and backup generation. Officials suggest that natural gas will remain part of Germany’s energy mix for much longer than previously anticipated, providing the flexibility needed to manage renewable fluctuations and safeguard the country’s industrial core.
Germany’s GDP Growth Over the Last 3 Years
The last three completed years (2022–2024) show a pattern of slowing growth turning into mild contractions for Germany’s real GDP. Here’s a summary based on official and reliable economic data:
These figures are annual percentage changes in real (inflation-adjusted) GDP, sourced from organizations like the German Federal Statistical Office (Destatis), World Bank, and economic databases. Slight variations (e.g., 2023 sometimes reported as -0.27%) exist due to rounding or revisions, but the trend is consistent: growth stalled after 2022.
Outlook for 2025: On Track for No Growth?
As of September 3, 2025, Germany’s economy appears on track for near-zero or stagnant growth in 2025, potentially marking a third year of little to no progress (following the contractions in 2023 and 2024). Here’s the current picture:
Year-to-date performance (Q1 and Q2 2025): Q1: +0.3% quarter-on-quarter (QoQ) growth (revised from initial +0.4%).
Q2: -0.3% QoQ contraction (revised down from initial -0.1% estimate on August 22, 2025, due to weaker exports amid U.S. tariff impacts and slowing industrial production).
Net result for H1 2025: Essentially flat (around 0% growth so far), with year-over-year (YoY) figures showing +0.3% in Q1 and +0.2% in Q2.
Full-year 2025 forecasts: Pre-Q2 revision estimates from major institutions (as of mid-2025) ranged from 0% to 0.4% growth, already indicating stagnation. Examples include:
Bundesbank (June 2025): 0% (stagnation).
IMF (April 2025): +0.1%.
OECD (June 2025): +0.4%.
European Commission (May 2025): 0%.
More recent post-revision outlooks (late August 2025) suggest even lower expectations, with some analysts describing the economy as “curling up in stagnation” or dipping into “recessionary territory.”
For instance, Roland Berger (late August 2025) projects just +0.2% for the year.
The recent Q2 downturn has likely prompted downward revisions to these forecasts, putting 2025 at risk of another year with no meaningful growth (or possibly a slight contraction). Key factors include ongoing export weakness, high energy costs, and geopolitical tensions. However, potential upsides like rising wages and lower inflation could support a modest recovery in H2 if industrial activity rebounds.
Overall, yes—based on current data and trends, Germany is on track for effectively no growth in 2025.
If I were a betting person who identifies as someone who looks at data, I would bet that the odds are extremely high that Germany’s economy will be negative again in 2025, or they will cook the numbers. The math is not adding up, and it seems that an uprising from the frustrated citizens may be on the horizon.
The bottom line
Germany’s experience underscores the complexities of transitioning to a green economy. While renewables are crucial for long-term climate goals, the country’s recent struggles reveal the importance of a balanced and reliable energy mix. And “renewables” in their current form are not sustainable, nor are they good for the environment. They only work when the sun shines, the wind blows, or subsidies flow. There are numerous examples of wind and solar-heavy grids, with prices escalating compared to nuclear, coal, or natural gas-only grids. We have yet to see a truly sustainable renewable energy installation.
One also has to ask, when will the Germans demand that the nuclear reactors start being turned back on? They turned off clean energy, which led to the energy crisis.
Perhaps when technology advances, we can look forward to an energy transition, but for now, we have never experienced an energy transition driven by “renewable energy”. We have only been in an energy addition.
As Germany sees a bigger role for gas to keep the lights on, policymakers face tough choices on how to reconcile climate ambitions with economic and social realities. Stu Turley on the Energy News Beat Podcast has said before that when energy prices become exorbitant, regimes change, and people demand lower-cost energy. We are seeing this in Europe now, along with the beginnings of social unrest in the UK and the EU. People cannot put up with Net Zero’s unaffordable energy goals. For the folks in Germany keep your head on a swivel. With six candidtates from the right sudenly die, and while the police are saying there is no foul play, the statistical odds of all 6 having a sudden health problem are zero.
As for the staff at Energy News Beat, we will continue to evaluate good energy investments and see which ones give investors the best returns while having the least impact on the environment.
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