Agora calls for swift action in industry and the building sector

24.01.2025

Source: E & M powernews

In the run-up to the Bundestag elections, the Agora think tanks have developed proposals on how ambitious climate protection and economic growth can be combined.

In the coming 21st legislative period, the course must be set for a resilient and climate-neutral economy, emphasized the think tanks Agora Energiewende and Agora Industrie at a press conference in Berlin. A mix of different measures offers solutions to strengthen the economy in the transition to climate neutrality in the long term and thus overcome the current crises. The economy must be strengthened and the heat transition must be made socially responsible.

In an analysis, the Agora experts found that Germany had already failed to meet the requirements of the EU Effort Sharing Regulation by 2024. This is due to the fact that the building and transport sectors covered by this are lagging behind in terms of reducing greenhouse gases. Furthermore, the decarbonization of industry is also making too little progress. If countermeasures are not taken quickly, the climate gap under the Effort Sharing Regulation could grow to around 130 million tons of CO2 by 2030, which would lead to penalties in the billions being paid to the EU, warns Agora.

Reduce grid fees and electricity tax

For the electricity market, the experts therefore recommend short-term relief and structural cost reductions that benefit all consumer groups. This would stimulate electrification in industry as well as in heating and transport, which would promote climate protection. This is because the energy transition is on track in the electricity sector. In order to stimulate the transition, transmission grid fees should be reduced to the 2023 level, which many parties also have in their election manifestos. According to Agora, lowering the electricity tax to the European minimum and a state takeover of the "surcharge for special grid use" would also help.
For future grid expansion, the experts recommend prioritizing overhead lines and the use of federal equity for investments in transmission and distribution grids. Agora expects specific electricity system costs to fall by around a fifth from 2030. This is because when the demand for electricity from industry, transport and buildings increases, it will be spread over more kilowatt hours and more shoulders. To achieve this, however, the pace of expansion of renewable energy plants must be maintained. "This will lower electricity prices for all consumers and make the electricity system more resilient to external fossil fuel price shocks," say the Agora experts.

Targeted strengthening of the economy

The German economy has not yet fully recovered from the fossil fuel crisis and investment activity remains at a low level. To counteract this, the experts recommend stimulating climate-friendly investments and securing sales markets. This includes developing current climate protection agreements into innovation guarantees. A further developed instrument should combine CAPEX and OPEX support in a simplified form and hedge risks associated with the development of CO2 prices. There should also be a tax-based investment premium for efficiency technologies that promotes the implementation of measures from energy management systems or energy audits.

Government guidelines for green lead markets and quotas could also increase demand for the ramp-up of climate-neutral raw materials. Internationally, Germany should work with the EU to drive forward standards that promote energy efficiency and climate protection, for example to reduce embodied carbon in the building sector. Clear standards can also help the heating industry, which has invested in production capacities that are currently underutilized due to the hesitant heating transition.

Supporting local authorities and the building sector

Both the political discussion about the Heating Act and the high electricity prices are to blame. Countermeasures could be to make subsidies more pragmatic and more socially staggered. It is also important to support local authorities in their mammoth tasks in the heating transition. According to Agora, this includes extending and strengthening funding for efficient heating networks (BEW) and supporting the creation and implementation of municipal heating plans. Germany must also implement the EU Buildings Directive by 2026.

According to the think tank's calculations, the decarbonization of the building sector (including heating replacement, refurbishment, the creation of new living space in existing buildings, social graduation and cushioning) will require public funding of around 17 billion euros per year from 2025 to 2030. However, this sum could stimulate enormous private investment with the right guidelines. To this end, the funding should be designed more pragmatically and staggered socially.

A debt rule adapted to the new realities should allow for investments, productive expenditure and supporting expenditure in the transition to climate neutrality, the experts recommend.

The Agora study "Climate-neutral Germany" is available online.

Author: Susanne Harmsen