Germany's ongoing energy transition strategy could impose costs of up to $6.3 trillion by 2049, the German Chambers of Industry and Commerce (DIHK) warned on Wednesday. The projected financial burden could hit both businesses and households while undermining the country's competitiveness.

Berlin aims to meet 80% of electricity needs with renewables by 2030 as part of its goal to achieve climate neutrality by 2045. Despite growth in wind and solar energy, electricity prices remain among the highest in Europe, and further grid investments are expected to drive costs higher.

A study by Frontier Economics, commissioned by DIHK, found that annual private investment in energy, industry, buildings, and transport would need to rise to $132-370 billion by 2035, up from an average of $96 billion in 2020-24. Energy system costs from 2025-2049 are forecast at $5.6-6.4 trillion, including $2.7 trillion for imports and $1.4 trillion for grid expansion.

DIHK President Peter Adrian warned that "the energy transition risks driving energy-intensive industries abroad while weakening Germany's economic base." The report recommends cost-saving measures such as enhanced carbon trading, lighter regulation, and expanded use of gas networks for hydrogen and decarbonized gas, potentially saving up to $1.06 trillion by 2050. Total savings could exceed $1.17 trillion if climate neutrality targets are adjusted.

The findings arrive ahead of a government review of energy demand and transition policies, highlighting the tension between ambitious climate goals and economic competitiveness.

Source: reuters.com/ DIHK