Germany is the fourth-largest economy in the world and ranks 11 out of 120 countries on the ETI 2023. Since 2014, Germany’s score on the ETI has increased by 6%, which shows both the robustness of its energy transition efforts and the challenges large economies face in improving quickly. Within system performance, Germany’s scores on the secure and sustainable dimensions have improved, driven largely by supply security, an increase in share of renewable energy in the electricity mix and strong reductions in the energy intensity of the economy. Even though the carbon intensity of the overall energy mix has declined over the years by 9%, it remains relatively high, owing to persistent challenges in decarbonizing hard-to-abate sectors, such as heating, transport and heavy industry. Germany ranks fifth globally on transition readiness, which provides an assessment of the enabling environment for energy transition, as it is one of the top three countries on regulation and political commitment.

The core elements of Germany’s energy transition are improving energy efficiency and expanding renewables as quickly as possible. The government has invested in the development of energy-efficient technologies and infrastructure, such as smart grids and electric vehicle charging stations. This has resulted in Germany now producing over 40% of its electricity from renewables,³² having set a goal of reaching 80% by 2030.³³ The country has introduced several policies aimed at increasing the share of renewables in the energy mix, phasing out nuclear power (with the last plant closing in April 2023) and reducing GHG emissions, resulting in the country becoming a leader in the energy transition. The Energiewende (energy transition) was instituted nearly a decade ago as a plan for transforming the energy system, making it more efficient and supplied mainly by renewable energy.

The German Renewable Energy Sources Act has played a significant role in the transition by providing a legal framework and financial incentives for the expansion of renewable energy sources. This, together with the Energy Industry Act, forms the legal basis of the German energy industry and provides “a framework policy to enhance competition, security of supply and sustainable energy production …Furthermore, this Act stipulates supplementary provisions for the access of electricity from renewable sources to the grid as well as the construction of intelligent grids including electricity storage. In 2012 the law was amended to speed up the expansion of offshore wind farms. The major focus is on a system change towards a consistent and efficient offshore grid expansion by introducing a binding offshore grid development plan”.³⁴ The government also passed a law in 2020 that required phasing out all coal-fired electricity generation no later than 2038; the timeline was recently brought forward to 2030. The net result of these policies is reflected in the country’s high ETI scores on regulation and political commitment, as well as decarbonized and clean energy.

Energy transition remains a process as Germany’s diversification of its energy mix is not purely focused on sustainability and efficiency gains but also on security. Over-reliance on imported gas from Russia and high energy prices were the main challenges faced by Germany during the energy crisis. The Russia-Ukraine war prompted the government to institute emergency measures, such as building LNG regasification capacity and delaying coal plant closures, which slowed down the transition momentum and locked in more emissions in the system. To ensure reduced dependence on Russian gas and accelerate the longer-term transition in Germany, the government has instituted numerous amendments to existing laws and funding programmes that primarily focus on enhancing the nation’s renewable energy capabilities, particularly in onshore wind; increasing the volume of renewable power auctions; and speeding up grid planning and the growth of offshore wind connections to carry electricity generated from wind power in northern Germany to large industrial complexes in the south. Additional actions, such as “creating the legal and financial frameworks for carbon contracts for difference, an instrument that supports industry in transitioning to climate-neutral production processes”,³⁵ promoting research and development in green hydrogen to create modern future-oriented climate protection technologies, and forming strategic partnerships, could help ensure an orderly energy transition in Germany and provide lessons for other countries.