Will Germany be the first country to abandon its net-zero emissions commitment?
In recent months, the German government has been trying to find alternative ways to save its heavy industry from the impact of high energy prices, which have hindered Germany's progress towards its goal of achieving net-zero emissions by 2045. High energy prices have led to a shift in production to Asia. For example, last year, chemical giant BASF announced it would invest £10 billion in a new plant in China due to energy costs. In response, the German government will launch a £200 billion Climate Transition Fund to invest in green technologies and subsidize projects affected by the ban on new gas boilers next year. However, some power plants have had to restart to cope with reduced Russian gas supplies, allowing some coal-fired plants to receive subsidies. Meanwhile, Germany is opposing EU proposals on climate and other environmental requirements. The German automotive industry has successfully mitigated the EU's ban on gasoline and diesel vehicles from 2035 by allowing internal combustion engines to use synthetic "e-fuels" made from hydrogen and carbon dioxide. How did Germany, Europe's most ambitious nation on net-zero emissions, become a laggard? For years, Germany relied heavily on cheap Russian gas and struggled with renewable energy. Despite the impact of the Russo-Ukrainian war, Germany still shut down three nuclear power plants ahead of schedule in early 2021. However, with energy prices currently high and wind and solar power unable to provide sufficiently cheap and reliable energy to replace all fossil fuels, the inevitable result will be that more and more German industrial production capacity will be transferred to South Asia.