Many companies no longer have any scope for implementing climate protection measures
© Wolfgang Weinheupl / Westend61 / Getty Images Plus
Confidence in energy policy among German businesses is currently at an all-time low. This is shown by the IHK organization's Energy Transition Barometer 2023, in which 3,572 companies from all sectors and regions took part. It shows the worst value since the start of the surveys in 2012.
Achim Dercks
© DIHK / Werner Schuering
"While companies used to also see opportunities in the energy transition, the risks now outweigh the opportunities in the assessment of the economy as a whole," Dercks said. "Large parts of our economy are strongly driven by concerns about an inadequate energy supply, even in the medium and long term. This is an overall worrying development that we should all take very seriously."
Overall, companies in Germany expect significantly more risks than opportunities for their own competitiveness: For 52 percent of companies, the energy transition will have a very negative or negative impact on their own business, and for only 13 percent a very positive or positive impact. On balance, on a scale of minus 100 ("very negative") to plus 100 ("very positive"), the barometer value is minus 27. In the last two years, the value was only minus 7; the previous low of minus 13 in 2014 was the result of additional energy levies and charges.
In energy-intensive industry, as many as three quarters of companies see themselves negatively or very negatively affected. "Given the great importance of industry for the entire business location, these figures are alarming," warned Dercks. "Even in sectors that often benefit directly from orders as part of the energy turnaround - such as the construction industry and services - the barometer shows that sentiment is clearly clouding over."
A central trigger for the negative assessments of the companies is the energy policy consequences of the Russian war of aggression against Ukraine. "This development is making it much more difficult to implement the energy transition," Dercks clarified. "Our survey shows: Unfortunately, policymakers have so far failed to successfully counteract this in a sustainable manner. After the energy price shock at the end of last year and the relatively mild winter, companies are deeply concerned about future developments. They see their competitiveness being called into question."
Energy prices remained at a high level, and there was a lack of prospects for the economy in Germany, the DIHK deputy managing director concluded. "The central questions have not been answered."
From the point of view of the companies, a lack of predictability and reliability in energy policy move to the top of the list of obstacles to transformation. Almost 60 percent of companies feel thwarted by this. "Companies are increasingly confronted with targets that are almost impossible to implement in practice," Dercks criticized. "Added to this are savings targets from the Energy Efficiency Act, which no one can say how they can be achieved without shutting down production."
This is reflected in the barometer: Three quarters of companies are scaling back their investment activities. In the energy-intensive industry, almost half of the companies are even restricting their investments in core areas. "This is the opposite of the investment upswing we need to overcome the current crises and accelerate the transformation toward climate neutrality," Dercks said.
Among companies as a whole, the voices that want to take on the challenges of energy policy in Germany still predominate. Loyalty to the location remains strong among many companies.
In industry, however, and especially among large companies, plans to turn their backs on Germany as a business location are increasing significantly. Almost one third of industrial companies (32 percent) are planning or implementing the relocation of capacities abroad or the reduction of their production in Germany - an increase of 16 percentage points, i.e. double the figure for the previous year.
"Politicians must take countermeasures here as quickly as possible to give the economy a perspective in Germany," warned Achim Dercks. "The DIHK has drawn up five points to secure the energy supply for companies. Their rapid implementation is important for Germany as a business location."
More and more industrial companies are being forced by high energy prices and the uncertain energy policy environment to limit their production in Germany or even move away completely. Without relief, companies will lose their energy transition capability.
With an investment subsidy for direct supply contracts (PPAs), additional capacity can be leveraged at renewable energy plants, thus lowering electricity prices. Complemented by low taxes and levies, competitive energy prices can be achieved across the board.
With the Electricity Partnership, the DIHK has developed a concept to work constructively on improving the framework conditions based on the concerns of the IHK member companies. At the heart of the DIHK concept is the expansion of electricity supply and a reduction in ancillary electricity costs. In electricity partnerships between operators of renewable energies and consumers from industry and commerce, the energy is supplied directly by the producer. In combination with an investment subsidy and relief on grid charges, this leads to a rapid expansion of the energy supply and lower electricity prices.
Companies need planning security. The pace of hydrogen production must increase massively. From the outset, the hydrogen core network should be subject to regional planning to ensure that the infrastructure is developed according to the needs of the companies. Moreover, hydrogen demand will not be met without imports. Energy partnerships with potential supplier countries should be concluded swiftly, widely and over the long term, and uniform or at least comparable standards for climate-neutral hydrogen should be created.
A sufficient supply of hydrogen is a major concern, especially for companies in industrial regions - both in terms of quantity and regional availability. Hydrogen is indispensable for the energy transition toward climate neutrality. Many industrial processes cannot be electrified because they require high temperatures in the process heat or hydrogen as a basic material for production.
The German government is aiming for 10 gigawatts of green hydrogen electrolysis capacity by 2030. This could produce one-fifth of the estimated total demand of around 130 terawatt hours of hydrogen. At the end of last year, we had 79 megawatts of realized electrolysis capacity in Germany, less than 1 percent of the target.
Companies need planning certainty. The pace of hydrogen production must increase massively. From the outset, the hydrogen core network should be subject to regional planning to ensure that the infrastructure is developed in line with companies' needs. Moreover, hydrogen demand will not be met without imports. Energy partnerships with potential supplier countries should be concluded swiftly, widely and over the long term, and uniform or at least comparable standards for climate-neutral hydrogen should be created.
Lack of predictability and reliability in energy policy is the number one transformation barrier for businesses. Radical simplification is therefore needed: All permit applications that must go through an administration should be given binding start and end dates. Submitted applications that do not receive a decision from the authorities within this period are then automatically deemed to have been approved.
It will also be quicker and easier if the federal governments extend acceleration procedures already introduced to other areas - for example, the relief for LNG terminals to other infrastructure projects or the relief for the solar package, which has so far only applied to private property owners.
Companies are faced with a growing number of reporting obligations and bureaucratic requirements. Even potential claims for financial relief, such as those relating to the energy price brakes, are sometimes not even asserted because the effort and requirements involved are prohibitively high. In addition, there are new bureaucratic requirements, such as those relating to mandatory sustainability reporting. But applications for grid connection and certifications also quickly lead to bureaucratic overload for companies setting up larger PV systems.
The principle that an old regulation must be dropped for a new one seems to have been suspended when it comes to energy transition issues. For example, there are now fewer regulations for the approval of PV systems. On the other hand, several new regulations are being added elsewhere, namely in the new Energy Efficiency Act. This means that many companies will now have to set up new management systems, which in turn will have to be certified. Apart from the duplication of processes in the processes, there are not even enough energy consultants and certifiers to fulfill the formal requirements.
The bureaucratic requirements tie up personnel and financial resources that are lacking elsewhere. They hinder entrepreneurial creativity and limit existing potential. From the point of view of companies, economic efficiency, voluntariness and openness to technology should be the guiding principles for energy policy measures, especially with regard to energy efficiency. These principles are more conducive to the energy transition than bureaucratic verification, reporting and implementation obligations.
The expansion of power grids is making only slow progress: 12,000 kilometers of new power lines are needed as part of the energy transition. Around 9,000 kilometers, or three-quarters of them, have not even been approved yet, let alone under construction.
A lack of grids leads to cost-intensive shutdowns, especially of wind power plants, and interventions to stabilize the grid, which further increase the already high grid fees. This endangers the energy supply and makes it significantly more expensive for companies. According to current planning, investments of around 250 billion euros will be needed by 2045 for a future-proof power grid. These costs will be passed on to companies and consumers through further increases in network charges.
What is needed here is a clear signal from policymakers to limit network charges. They already account for up to 20 percent of the electricity price. High network charges due to greater use of electricity instead of gas must not be allowed to hinder the transformation of companies toward climate neutrality.
The bureaucratic requirements tie up personnel and financial resources that are lacking elsewhere. They hinder entrepreneurial creativity and limit existing potential. From the point of view of companies, economic efficiency, voluntariness and openness to technology should be the guiding principles for energy policy measures, especially with regard to energy efficiency. These principles are more conducive to the energy transition than bureaucratic verification, reporting and implementation obligations.
The complete survey results with the questionnaire attached can be downloaded here:
Energy Transition Barometer 2023 (PDF, 1 MB)
