International Energy Agency recommends Germany to use energy transition as a driver of energy security and economic competitiveness

In its report on German energy policy published today, the International Energy Agency (IEA) expresses its appreciation for the German energy transition and at the same time calls upon Germany to increase its efforts to reduce emissions in the transport sector and to draw up a roadmap for the phase-out of gas in the electricity and industrial sectors, so that the country will be able to attain climate neutrality by 2045.

Stefan Wenzel, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Climate Action, said: “The ten recommendations for action made by the IEA provide important impulses for our energy transition, especially now as a new federal government is being formed in Germany. A lot has already been achieved so far. The expansion of wind and solar installations and of new electricity grids has gained momentum. The coal phase-out is well advanced. More than half of the electricity being consumed in Germany is now permanently based on renewable energy. We have opened a new chapter of the energy transition. We now need to safely control the new energy system, build storage facilities and resolutely continue the expansion of renewable energy - in order to secure not only electricity supply, but also heat supply. This is making us more independent of energy imports and more competitive, and is reducing harmful emissions. Not only Germany, but the whole of Europe is benefiting from this.”

According to the IEA, the energy transition is and continues to be crucial: it is key to Germany’s energy security and economic competitiveness. Germany therefore needs a stable and reliable legal, political and economic policy environment in the long term, especially as regards the investment environment for renewable energy, heat pumps, district heating and electric mobility. While German consumers are currently paying relatively high electricity prices, energy policy must continue to aim at affordable prices and also address distributive aspects. As to lowering electricity prices, the IEA recommends Germany to lower taxes on electricity and to rapidly reduce the impact of the high grid charges.

In the context of the energy transition, Germany intends to increase the share of renewable energy in gross electricity consumption to 80% by 2030. According to the IEA, the country needs to optimise the efficiency and resilience of the electricity system for the integration of renewable energy. To this end, the IEA recommends Germany to speed up the smart meter rollout, rapidly expand electricity storage facilities and to create locational signals in the electricity system in order to identify regional grid bottlenecks.

The IEA believes that more energy efficiency and renewable energy are key to a successful decarbonisation of the building stock by 2045, emphasising the use of heat pumps and the expansion of low-carbon, climate-friendly heat networks. The IEA therefore recommends Germany to continue to implement and to further develop measures in the heat sector and to communicate them to the general public.

According to the IEA, Germany is already doing well in the field of hydrogen in light of its National Hydrogen Strategy, the Import Strategy, the H2Global double auction model, the planning of the hydrogen core network and its innovative financing model. Germany now needs to take more measures to stimulate demand for low-emission hydrogen. This includes public procurement, targeted Carbon Contracts for Difference (CCfDs) and the development of standards for green materials.

The ten recommendations for action were drawn up starting last summer by an international review team consisting of government representatives of other IEA Member countries and IEA experts in an intensive consultation process with the Federal Ministry for Economic Affairs and Climate Action, further Ministries and stakeholders outside the German federal government. The IEA regularly conducts reviews of the energy policies of its Member countries, i.e. every five to six years. They are a compulsory part of membership in the IEA. The aim is to support the respective countries in further developing their energy policies, so that they can attain their climate and energy targets, and to foster the sharing of experience at the international level.

Link to the Energy Policy Review Germany 2025:
https://www.iea.org/news/iea-report-highlights-the-opportunity-for-germanys-energy-transition-to-strengthen-its-security-and-competitiveness