Last year, greenhouse gas emissions in Germany fell to 673 million tons of carbon dioxide equivalent, according to Agora Energiewende. That is down 46 percent compared to the reference year of 1990 and the lowest level since the 1950s. At the same time, carbon emissions were about 49 million tons below the German national target of 722 million tons as specified by Germany’s Climate Protection Act and 73 million tons lower than the prior year. [Note: carbon dioxide equivalent includes methane and nitrous oxide emissions.]
Two main developments were responsible for the decrease. First, coal fired power generation fell to its lowest level since the 1960s, saving 44 million tons of carbon dioxide alone. The reasons for this were a significant drop in electricity demand, increased electricity imports from neighboring countries — around half of which came from renewable sources of energy — as well as a decrease in electricity exports, and a slight increase in domestic renewable electricity generation.
Second, emissions from industry fell significantly, largely due to a decline in production by energy intensive companies like steel making as a result of the economic situation and international crises. While overall economic output shrank by 0.3 percent according to preliminary figures, energy intensive production fell by 11 percent in 2023.
Renewables Up, Buildings And Transportation Unchanged
According to calculations by Agora, about 15 percent of the carbon dioxide reduction is attributable to adding renewable energy capacity, efficiency gains, the switch to fuels that produce less carbon dioxide, or other climate friendly alternatives. About half of the cuts are due to short term effects such as lower electricity prices, according to the Agora analysis, which points out that while lower emissions are good news, most of the emissions cuts in 2023 are not sustainable from an industrial or climate policy perspective. For example, emissions may rise again as the economy improves or a portion of Germany’s industrial production is moved to other countries.
Emissions from the built environment and transportation remained almost unchanged in 2023, meaning those sectors missed their climate goals for several years running. By failing to reduce those emissions, Germany will likely miss its climate targets agreed to with the European Union and will have to either purchase emissions certificates from other EU member states or pay fines to the EU.
“2023 was a two speed year as far as climate protection in Germany is concerned. The energy sector notched up a climate policy success with its record level of new renewable power, taking us closer to the 2030 target,” said Simon Müller, director of Agora Energiewende. “However, we don’t consider the emissions reductions seen in the industrial sector to be sustainable. The drop in production due to the energy crisis weakens Germany’s industrial base. If emissions are simply shifted abroad as a result, this won’t benefit the climate. The buildings and transport sectors are also lagging as far as structural climate protection measures are concerned.”
In order to permanently replace carbon intensive forms of electricity production, more renewable energy resources need to be installed in the coming year. German industries need to invest in things like the production of carbon neutral steel and the transition from gas to electricity for process heat. In the buildings sector, measures already agreed to need to be implemented in 2024. The transportation sector also requires a fundamental political course correction to achieve a breakthrough for climate friendly mobility, Agora says.
Germany Sees Drop In Emissions From Energy Generation
Emissions in the energy sector dropped by 46 million tons in 2023 to 177 million tons, which is less than half the level recorded in 1990. The 21 percent drop in emissions compared to 2022 is mainly due to the sharp decline in coal fired power generation. Lower electricity production from lignite saved 29 million tons of carbon dioxide while hard coal fired power generation saved 15 million tons. Agora cites three reasons for this development.
First, the extraordinary decline in electricity consumption of 3.9 percent compared to 2022 is a result of the fossil fuel crisis. Second, strong renewable electricity generation across Europe meant that Germany imported more electricity instead of producing it in domestic coal fired power plants. Over the course of the year, Germany sold around 58 terawatt hours of domestically generated electricity abroad and imported 69 terawatt hours. 49 percent of electricity imports came from renewable sources — primarily hydro and wind power — and 24 percent came from nuclear power.
Third, renewable energy production increased by 5 percent. Total emissions from the energy industry, which also includes refineries and district heating in addition to the electricity sector, amounted to 210 million ton — 18 percent below the previous year’s levels.
Overall, the supply situation on the energy market eased in 2023, and both electricity and natural gas prices fell compared to the previous year. New customers, in particular, benefited from price reductions. Prices for existing customers remained high, as electricity providers generally delay passing the fall in prices on the electricity exchange to customers. Natural gas prices also fell in 2023 but remained above pre-crisis levels.
“The price of electricity is more strongly affected by levies and surcharges than the prices of fossil fuels such as oil and gas. This is slowing the switch by households to climate-friendly technologies such as electric cars or heat pumps,” said Müller. “A reform of the levy and surcharge system is necessary to correct the imbalance. The changes should make it possible for low electricity prices to reach consumers in times of high wind and solar power generation.”
Record levels of newly installed solar capacity contributed to the drop in electricity prices: Germany added 14.4 gigawatts of photovoltaic capacity last year, an increase of 6.2 gigawatts compared to the previous record in 2012. Although there were fewer hours of sun in 2023, solar power facilities produced 61 terawatt hours of electricity – one terawatt hour more than the previous year.
Wind energy generation had a record year, due to favorable weather conditions and a slight increase in the number of wind turbines. At 138 terawatt hours, wind remained the largest source of electricity, producing more than all of Germany’s coal fired power plants, which produced 132 terawatt hours. However, the expansion of onshore wind power was much too low at 2.9 gigawatts. To achieve the country’s binding expansion targets for 2030, annual average wind capacity additions needs to rise to 7.7 gigawatts from 2024, Agora says. Overall, renewable energy managed to supply more than 50 percent of total gross electricity demand for the first time in 2023.
Industrial Emissions Fall
The industrial sector also recorded a significant drop in emissions in 2023 — 20 million tons or 12 percent less compared with 2022. With total emissions of 144 million tons of carbon dioxide, the sector clearly beat the annual target of 173 million tons. This means that industrial emissions have fallen to their lowest level since they were first recorded in 1990. “The consequences of the fossil fuel crisis and the economic slowdown were especially evident in the CO₂ emissions of energy-intensive industry,” said Müller. An important factor in the slump in production was the ongoing price rise in the European gas market due to the switch from cheap pipeline gas to more LNG imports.
“Companies in Germany urgently require financing and planning security to make the switch from fossil fuels to electricity based processes if the country is to successfully compete as a business location while striving for climate neutrality,” said Müller. The goal must be to secure important value chains locally and at the same time achieve long term emission reductions across the industrial sector. Meeting the targets for expanding renewables is also essential for this.
Müller welcomed that Germany and the EU set in motion important industrial policies in 2023, such as strengthening the European Union Emissions Trading System, agreeing on CO₂ compensation payments for raw material imports into the EU or climate protection agreements to finance the transformation of industry towards climate neutrality.
More Emissions Reductions Needed For Germany
Despite the drop in emissions compared with 2022, there remains a significant gap when it comes to achieving the 2030 climate targets. “Germany needs to ramp up investments to achieve its climate targets,” said Müller. State funding is needed for climate neutral heating systems and the transformation of industry. Significant investment is also needed in the area of electricity, heating and hydrogen grids. “In 2024, the German government will finally have to reliably secure the necessary investments for climate neutrality. A smart mix of measures can ensure that we achieve more climate protection for every euro that comes out of the public purse,” he said.
That’s easy for Müller to say but the path forward for Germany is difficult. There is much political turmoil on the Continent, the Russian assault on Ukraine continues unabated, and even though sunshine and wind are free, the devices to harvest them cost a lot of money and have to be paid for. One positive step forward would be if nations stopped their direct and indirect subsidies of fossil fuels, which the IMF estimates amount to more than $5 trillion a year, and put that money toward building more renewable resources.
Any reduction in emissions is welcome but the message here is that a lot remains to be done. So let’s pause for a sip of Liebfraumilch to celebrate Germany’s good news and then get back to work building the world we need to sustain human life for millennia to come.
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