Germany will be climate-neutral in 2035

Germany is heavily dependent on Russia for gas, oil and coal. The country wants to put an end to it as soon as possible. For example, all electricity must be produced sustainably by 2035. What are the most important steps the country needs to take? Our market research department has mapped them.

In the short term, the use of coal for power generation in Germany will increase significantly. This is a temporary effect, partly due to the war in Ukraine. This does not change the fact that Germany is pursuing ambitious green transition plans. These go further than the Paris climate goals. Renewable energy capacity will quadruple and the German government wants to stop the use of coal by 2030.

First buyer of Russian gas

Until last year, around 55% of Germany's natural gas supply came from Russia. Gas is an important raw material for the German (chemical) industry and more than half of the households in Germany depend on gas for heating. In addition, a quarter of all homes are heated with oil. Germany gets 35% of its oil from Russia. And 50% of its coal. This explains the German government's haste to accelerate the transition to renewable energy.

Good for the economy

The “greening” will give a significant boost to the German economy. Until 2035, 40 billion euros of added value per year (1.1% of GDP in 2021). Expanding renewable energy capacity requires an average annual investment of €28 billion (until 2035). The infrastructure expansion will provide jobs for an average of 440,000 people for the period 2022-2035. The challenge will be to find them in a currently overcrowded job market.

Small adjustments needed

According to our study, things will have to change to produce renewable energy at an accelerated rate. The planning and approval procedures for renewable energy, electricity and hydrogen networks must be systematically simplified and accelerated. An integrated system development plan should also be drawn up for the extension of the infrastructure.

Almost 50% sustainable now

In the first half of 2022, almost half of all electricity consumed in Germany was generated from renewable sources. In 8 years, we should reach 80%. We expect that the gross electricity consumption will then amount to 750 terawatt hours (TWh). The demand for electricity will increase sharply in the coming years due to the increasing electrification of industrial processes, heat and transport. To reach the 80% target by 2030, electricity production from renewable energy sources will have to increase from just under 240 TWh today to 600 TWh in 2030 and 875 TWh in 2035.

Repartition per energy source

Besides wind and solar energy, Germany is also investing heavily in hydrogen as a sustainable energy source. Onshore wind will provide nearly 160 gigawatts (GW) of power (54 GW in 2020), offshore wind 60 GW (8 GW in 2020) and solar 300 GW (54 GW in 2020). We expect that by 2035, nearly 90% of electricity demand will be met. Hydrogen will then contribute 7%. In theory, Germany should be able to be climate neutral by 2035.