Lack of planning certainty slows down industry

05.11.2025

Source: E & M powernews

A lack of planning certainty and regulatory requirements are hindering the transformation to a climate-neutral economy, says a study by the Bavarian Industry Association.

A lack of planning certainty for infrastructure projects and energy supply as well as regulatory requirements are hampering Bavarian industry's transformation to climate neutrality. This is the conclusion of the study "CO2 reduction costs for Bavarian industry in a trend scenario", which was commissioned by the Bavarian Industry Association (VBW) from the Forschungsgesellschaft für Energiewirtschaft mbH (FFE).

The focus is on the question of which technologies companies need to use in order to reduce CO2 emissions and the resulting financial burdens. To this end, the FFE modeled various scenarios based on different energy prices, regulatory requirements and innovation speeds. The results show that the path to climate-neutral industry remains expensive - especially as long as electricity prices remain high and grid infrastructure is insufficiently developed.

According to VBW, the lack of planning certainty in particular is holding many companies back. Uncertain political targets, slow approval procedures and unclear funding conditions are making investment decisions more difficult. "The transformation of industry towards climate neutrality while maintaining its competitiveness is one of the greatest challenges of the coming decades," said VBW Managing Director Bertram Brossardt. "Ambitious target paths provide the necessary direction - at the same time, they must be measured against the reality of existing markets, infrastructures and technologies."

The study defines so-called CO2 abatement costs, i.e. the economic effort required to avoid emissions with alternative processes. Particularly in industrial high-temperature processes or in the basic materials industry - such as steel, chemicals or cement - these costs are still far higher than today's production conditions.

Achieving complete climate neutrality in Bavarian industry would entail additional costs, the report continues. "It is encouraging that 90 percent of the total CO2 reduction potential can be achieved with 45 percent of these additional costs," says Brossardt. Investments in efficiency improvements and electrification make economic sense in principle. They already offer economic advantages today, as they reduce energy costs and strengthen competitiveness.

According to the FFE, efficiency measures and electrification are the most cost-effective levers in the short term. In contrast, technologies such as hydrogen utilization, CO2 capture (CCS) or synthetic energy sources require high initial investments and long-term planning security. The researchers emphasize that these technologies will only be economically viable once infrastructure, energy prices and subsidies are coordinated.

According to VBW, the inadequate energy infrastructure is a particular risk for the transformation. Today, companies have to make decisions about investments whose profitability depends heavily on future energy prices and regulations - factors that are currently almost impossible to predict.

"The results of the study clearly show that the path to climate neutrality is not a sure-fire success," says Brossardt. Bavarian industry can make its contribution if economic efficiency and climate protection are considered together. To achieve this, it is crucial that politicians, energy suppliers and companies act together and facilitate investment in future technologies.

Author: Stefan Sagmeister