Germany’s Energy Crossroads

After our conversation with Herr Schulz, the element of our conversation that stood out to me most is the current complexity of Germany’s energy transition. If Germany is to continue as a world leader in clean infrastructure, it must navigate geopolitical challenges, complex politics at home and an increasingly competitive global market for clean energy.

With the Russian invasion of Ukraine in February 2022, energy security has become a front-and-center issue. Historically, Germany has relied heavily on Russian natural gas imports. Western sanctions and the bombings of the Nord Stream pipeline have weakened Germany’s energy security. These geopolitical challenges are ongoing and will undoubtedly have major impacts on the future of the country’s energy transition.

In addition to these challenges, Germany has set some of the world’s most ambitious renewable energy targets. In September 2021, the government raised their 2030 renewable energy targets from 65% to 80%. This aggressive target will require large green energy investments in technology such as wind and solar as well as vast infrastructure upgrades to improve grid stability.

Another headwind that Germany is facing is the allure of the strong clean-technology jobs sector in the US. The recently passed Inflation Reduction Act (IRA) offers large subsidies and incentives in various renewable markets. This disruption is causing many European professionals to seek opportunities in the US. This is a big concern for many European nations and one that has triggered ongoing talks with President Biden.

The combination of these three challenges — geopolitical turmoil, aggressive domestic policy and international competition make this juncture extremely critical for Germany. Navigating this transition into the future will have major implications for Germany and the world’s fight against climate change.