Potential Consequences of the Energiewende for the Manufacturing Sector in Germany

Hubertus Bardt

International Journal of Management and Economics, 2015, vol. 48, issue 1, 7-20

Abstract: The abandonment of nuclear power and new focus on renewable energy sources represents a fundamental change in the structure of Germany’s electricity supply. In the wake of this change in energy policy (which is widely referred to as an energy turnaround), prices started to rise immediately and further increases are to be expected in the years ahead. For the manufacturing sector, this cost burden has been mitigated by exempting energy-intensive sectors from additional costs. However, this causes high levels of uncertainty for large electricity consumers as their current exceptional status may be called into question at some point in the future.Moreover, the price and cost effects of the German energy policy are not only restricted to energy-intensive enterprises. The metal production, parts of the chemical industry and other industries closely linked to electricity consumers in a complex value chain face higher price and cost risks, as do large segments of the manufacturing sector, which work closely with energy-intensive companies. These dense networks are critical in the joint development of innovations, one of the German industry’s main competitive advantages.This strength of the German economy may turn into a risk if the future of electricity-intensive industries is hampered by rising national energy prices. A potential relocation of energy-intensive companies to other countries would also weaken the competitiveness of other areas of German industry. Such risks need to be compared with new market opportunities provided by the energy turnaround. The industry seeks those opportunities especially in renewable energies and techniques for improving energy efficiency.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ijomae:v:48:y:2015:i:1:p:7-20:n:1

DOI: 10.1515/ijme-2015-0032

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