German Industry Emits More as Cheap, Dirty Fuel Lures Firms

(Bloomberg) -- German industry is emitting more carbon, despite a decline in production, as factories save costs by using dirtier fuels.

Emissions from industrial output rose by 2% last year, even amid a contraction in the sector, according to preliminary calculations from think tank Agora Energiewende. A further increase is expected if the economy recovers in the future, the group said in a report. 

The figures highlight the challenge for Germany, Europe’s largest economy, as it seeks to recover from a recession and bolster its energy security while pursuing ambitious climate targets. The nation aims to cut emissions by as much as two-thirds by 2030, but snap elections next month are adding to uncertainty over its green goals.

Germany accounts for roughly a quarter of the European Union’s energy-related carbon dioxide pollution — about as much as the next-largest emitters, Italy and Poland, put together. One reason is its massive industrial sector, with manufacturing responsible for a fifth of the gross value-added generated in the German economy. 

Overall, Germany still managed to cut its carbon emissions by 3% last year, as it shut some coal-fired power stations and ramped up renewables to generate electricity, according to Agora’s data. 

“We are on track with climate protection and the hard work is paying off: emissions are falling,” Economy Minister Robert Habeck said in a statement, adding that reliability and planning security are now needed. 

Last year, the German Environment Agency claimed the nation’s 2030 climate goal was within reach.

“However, as there had been a whole series of delays in climate policy since, there is no evidence that Germany is on track to meet its targets,” Agora’s Germany director, Simon Müller, told reporters on Tuesday. 

The decline in emissions has partly been driven by demand reduction and production cuts from energy-intensive industries, linked to the crisis triggered by Russia’s war in Ukraine. Sectors like transport and buildings were the worst performers last year, missing their respective annual emissions reduction goals, according to Agora.  

There’s a reluctance among households and corporations to embrace green technologies, despite an overall decline in electricity costs, the group said. Sales of heat pumps and new registrations of electric cars fell by 44% and 26% respectively last year, according to the report. Agora has called for greater political commitment to climate goals.

Renewables accounted for a record 62.7% share of net power generation, with wind energy taking the lion’s share. Solar energy amounted for about 14%, research institute ISE Fraunhofer said last week.

Germany’s Environment Agency will release official 2024 emission data in mid-March.

(Updates with additional details throughout.)

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