Vattenfall and Germany's central bank call on government to stay the course on energy transition

Amid growing uncertainty about the new German government’s future energy policy, both energy supplier Vattenfall and the country’s central bank, the Bundesbank, have come out in favour of staying the course on the shift to renewables. “The energy transition has long become irreversible,” the Swedish energy company’s head of German operations, Robert Zurawski, told Süddeutsche Zeitung.

“Europe will only remain competitive if it leaves fossil fuels behind. Not the other way around,” Zurawski said. “We must not lose momentum under any circumstances. We cannot afford to slow down the expansion of renewable energies.”

The Bundesbank also called on the government to stay the course on the energy transition: Following an analysis of why German industry has lost global market shares, the central bank's latestlatest monthly report said that "with regard to energy costs, it is vital to press ahead with the energy transition and do so efficiently." Energy policy think tank Agora Energiewende in a recent report backed the finding that expanding renewables will lead to lower electricity prices.

Chancellor Friedrich Merz and economy minister Katherina Reiche, both from the conservative Christian Democrats (CDU), have sowed uncertainty in Germany and beyond about the future pace of the country’s landmark energy transition. Although it remains unclear whether their statements critical of decarbonisation policies are indicative of the government's future course of action or were simply an attempt to woo conservative voter groups, they feed an overall impression that concerns about industrial competitiveness downgrade climate action objectives.

But given a lack of concrete policy proposals, there is little evidence yet that the government will in fact change course on energy policy. Some experts and environmental advocates have said that a recent budgeting decision to support lower gas prices, while at the same time breaking the promise to lower household electricity taxes shows that the government coalition is less consistent in phasing out fossil gas than its predecessor, which included the Green Party.

Vattenfall also called government plans for a subsidised industry power price “a mistake”, arguing that other measures, such as state guarantees for private power purchasing agreements, could have a similar effects, but at much lower costs. Vattenfall used to be the owner of lignite mines and coal power plants in Germany but has sold those activities to focus on renewables.

Germany’s energy and climate community is eagerly awaiting the economy ministry’s “reality check” on the risks and costs of the transition to renewable energies. The report is set to have a major impact on the course of the energy transition – according to the coalition treaty, it will form the basis for future energy policy.

A fresh forecast of future electricity demand and an assessment of grid expansion are set to be central to the report scheduled for release in September, following parliament’s summer recess. Climate policy advocates and the renewable energy industry fear that the monitoring could result in a significant slowdown in the rollout of renewables.

Vattenfall’s Zurawski said he was not particularly worried about the upcoming assessment, given that the government parties stuck to the country’s 2045 climate neutrality target in its coalition agreement.