Germany, as Europe's largest economy and central energy hub, has set a legally binding goal to reach complete climate neutrality by 2045. The country is implementing an ambitious energy transition, which Germans call Energiewende, by gradually phasing out fossil fuels and nuclear energy. By 2025, Germany had already succeeded in reducing greenhouse gas (GHG) emissions by 48% compared to 1990 levels. The coalition government, which took office in May 2025 under Chancellor Friedrich Merz, is committed to meeting these goals while striving to maintain the country's industrial competitiveness.
The energy sector and historical progress
Germany's electricity system can currently be described as the “cleanest in its history”. Renewable energy sources, primarily wind and solar, now provide more than half of the country's electricity consumption, reaching 56% in 2025. This rapid progress allows Germany, on the whole, to remain on track to meet its intermediate target of reducing emissions by 65% by 2030. The country completed its phase-out of nuclear energy in 2023 and plans to phase out the use of coal by 2038 at the latest.
Although electricity production is becoming “greener”, fossil fuels – oil and gas – still dominate the overall energy balance, particularly in the transport and heating sectors.
Uneven development across sectors
The heating and buildings sector remains one of the greatest obstacles. In 2025, 56% of households still used gas for heating and 17% used oil. Legislative reforms passed due to political disputes have given consumers more freedom of choice, but in practice, they have slowed down the replacement of “fossil” boilers with heat pumps. Meanwhile, Germany’s mobility and transport sector consistently fails to meet its emission reduction targets. Automakers are facing difficulties in the transition to electric vehicles; at the beginning of 2026, there were only 2 million electric cars on German roads out of a total fleet of 49 million vehicles. Deutsche Bahn is experiencing serious problems and delays in rail infrastructure. Industrial emissions have fallen by 48% compared to 1990, driven in part by a drop in production volumes due to a weak economy. To maintain competitiveness, the government has introduced “climate contracts” and subsidies to support industry. Chancellor Merz's government is actively promoting carbon capture and storage (CCS) technologies and increasing support for fusion research.
Two consecutive energy crises – the Russian invasion of Ukraine and the war in Iran – have caused a dramatic rise in energy prices. Germany currently has some of the highest electricity prices in the world for households. This, combined with public dissatisfaction, has contributed to the rise in the ratings of the right-wing party AfD, which could logically jeopardise the climate policy that Germany has been pursuing since the time of A. Merkel.
Success is not uniform...
Germany clearly demonstrates the possibility of significantly decarbonising an advanced industrial country through the massive integration of renewable electricity. However, German efforts and achievements are uneven – the successes in the electricity sector currently “mask” and compensate for serious stagnation and political hesitation in the transport and building heating sectors. To reach the set goal of full climate neutrality by 2045, Germany will have to find a balance between expensive technological innovation, maintaining industrial competitiveness, and a socially just transition to mitigate the growing political radicalisation in society.
The hydrogen economy – high hopes and the brakes of reality
Hydrogen – particularly green hydrogen produced from renewable energy – is intended to play a key role in the decarbonisation of Germany’s heavy industry, such as steel and chemicals. In practice, this sector is facing significant obstacles. Launching the hydrogen economy “at full capacity” has proven much slower and more difficult than expected. Due to high costs and slow progress, Friedrich Merz's government has decided to scale back certain national plans that were initially intended to make Germany a global leader in hydrogen technology. Germany is currently working on plans to decommission or repurpose existing natural gas grid infrastructure so that it can transport hydrogen in the future. This process is legally and financially complex, as local gas networks are currently the main source of income for hundreds of regional utility companies.
The situation with renewable resources – wind, sun and wood
Renewable energy is currently a success story for Germany's climate policy, accounting for 56% of all electricity produced. However, the use of resources is very uneven.
Solar energy is seeing the fastest growth, with Germany having already surpassed the 100 GW mark for installed solar capacity – the goal is 215 GW by 2030. So-called balcony electricity, or mini solar panels for households, has gained huge popularity.
Wind power capacities have reached 66 GW on land and 9 GW at sea. Although production is substantial, there are geographical differences, as most wind energy is produced in the windy north of Germany, while the main industrial centres are in the south. As the construction of large transmission lines was delayed for years, the situation still causes high grid balancing costs, although construction has recently intensified.
Although biomass has historically helped to increase the share of green energy since the 1990s, Germany's forests and peatlands are currently in a critical state. Due to heatwaves, extreme heat, pests, and forest fires, German forests and soil have become net carbon emitters, even though they should be acting as carbon sinks. Germany is currently failing to meet its forest and soil climate targets; to restore natural carbon sequestration, the government must implement a special “peatland and nature conservation strategy”.
German public opinion and internal struggles
Although there is historically high support for the energy transition within German society as a whole, in recent years, Brussels' “Green Deal” has become one of the most divisive and contentious topics in the country – which is not surprising.
The building heating reform caused a very significant socio-political conflict. The government's initial plan – to rapidly ban new gas and oil boilers, forcing a switch to expensive heat pumps – triggered huge public resistance. Parliament was forced to concede, passing legislation that gives citizens more freedom but slows down the transition. German residents pay some of the highest electricity prices in the world. There is dissatisfaction in society that large industrial enterprises receive tax breaks and electricity price subsidies, while ordinary households and tenants are burdened with the highest financial costs. Although a mechanism has been introduced that allows owners of poorly insulated homes to cover up to 95% of carbon tax costs, renovation rates remain too slow.
The energy crisis, exacerbated by the war in Ukraine and the conflict in the Middle East and Iran, triggered a leap in fuel and energy prices. Public dissatisfaction and concerns about the cost of living are being successfully exploited by the far-right party AfD, which is currently leading in German national polls and has achieved significant success in regional elections. This is understandable, as Germans are tired of the demands of climate policy, rising prices, problems caused by migration, and the decline of Germany's global competitiveness. Several experts and researchers warn that if climate policy is not shaped in a socially just manner, a sharp rightward shift in society will completely block the achievement of further climate goals in Germany and throughout Europe.
Sources: German and European Union energy and climate information websites