Sector Deep dive

Energy industry

The energy industry comprises energy production, energy conversion and the provision of energy for end use. This includes, for example, the extraction of fossil fuels such as lignite or natural gas, the generation of electricity in coal and gas-fired power plants, as well as the generation of electricity from renewable energy, but also the production of fuels in refineries or the distribution of energy in natural gas and district heating networks. In the future, processes such as the electrolysis of hydrogen or the production of other synthetic CO₂-free fuels will become relevant.

The transformation of the energy industry is highly relevant to the German energy transition, as it accounts for about one-third of Germany's GHG emissions, with the largest share arising from the conversion of lignite and hard coal, natural gas and oil into electricity. Furthermore, a large part of the decarbonization of the other sectors takes place through electrification, which requires a largely renewable power generation.

The essential strategy for reducing emissions is to phase out coal-fired power generation, expand wind energy and photovoltaics, and finally convert any necessary remaining gas-fired power plants to burning green hydrogen. In parallel, the energy infrastructure has to be adapted to the increasing demand for decentralization and the storage of electrical energy.

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Annual GHG emissions of the energy industry

135% on track Compared to the scenario Technology Mix

Annual GHG emissions from the energy industry, mainly due to converting energy carriers into electricity and heat, but also for the extraction of energy sources or the production of fuels in refineries.

GHG emissions from the energy industry are strongly dominated by fossil power generation, as well as heat generation, and fuel production in refineries. Due to the rising CO₂ price in European emissions trading and the (partly) resulting decline in coal-fired power generation, emissions also fell significantly in 2015-20. In 2020, lower electricity demand as a result of the Corona pandemic and weather-related higher electricity generation from wind energy also contributed to this. This significant decline in emissions continued in 2023 and 2024.

Key points

  1. In 2015-2020, GHG emissions from the power industry decreased mainly due to lower coal-fired power generation; this reduction continued in 2023 and 2024.
  2. Replacing fossil fuel power plants with wind and PV makes GHG savings comparatively easy to achieve in the power industry
  3. Successful defossilization of power generation is particularly relevant for climate-neutral electrification of industry, transport and building heat.

CO₂ emissions per unit of generated electricity

34% far too slow Compared to the scenario Technology Mix

CO₂ emissions from the energy industry per unit of electricity generated (minus internal demand) by combusting fossil fuels.

Climate protection scenarios consistently show that electricity is the energy source that can be decarbonized most quickly and easily. Decarbonization is illustrated by the CO₂ intensity of electricity generation: In the target scenarios, this falls to 45-130 gCO₂/kWh by 2030 (around 70 gCO₂/kWh in the lead model), compared to 330-370 gCO₂/kWh in the years 2019-21.

Key points

  1. Climate protection scenarios consistently show that electricity is the energy source that can be decarbonized most quickly and easily.
  2. Since 2015, the CO₂ intensity of electricity generation has fallen by around 20 gCO₂/kWh per year, which corresponds to the necessary decarbonization in the Ariadne target scenarios.
  3. The rapid phase-out of coal and the accelerated expansion of renewables are essential for achieving the target.

Installed capacity offshore wind

38% far too slow Compared to the scenario Technology Mix

Installed electrical capacity of offshore wind turbines, adjusted for self-consumption (net capacity).

The rapid expansion of the installed capacity of renewable energies has a direct reducing effect on the emission intensity of electricity generation and - with an increasing electrification of other sectors - also on the transformation outside the energy industry.

Key points

  1. After hardly any new offshore wind energy was connected to the grid in 2020-23, around 750 MW was added in 2024.
  2. To achieve the 2030 target set by the WindSeeG 2023, the expansion rate would need to increase more than 7 times compared to 2029-24.
  3. The Ariadne target scenarios show a corridor of 25-30 GW for 2030, with the 2030 target of 30 GW being only (just) achieved in the Focus Electricity target path.

Installed capacity onshore wind

37% far too slow Compared to the scenario Technology Mix

Installed electrical capacity of onshore wind turbines, adjusted for self-consumption (net capacity).

The rapid expansion of the installed capacity of renewable energies has a direct reducing effect on the emission intensity of electricity generation and - with an increasing electrification of other sectors - also on the transformation outside the energy industry.

Key points

  1. To achieve the 2030 goal of 115 GW of installed capacity for onshore wind turbines, the expansion rate would need to increase more than fourfold compared to the average of the years 2019-24.
  2. The conditions for the expansion of wind energy have been improved with the Easter package.
  3. The upcoming years will show whether the measures are sufficient to reach the necessary speed.

Installed capacity photovoltaics

94% too slow Compared to the scenario Technology Mix

Installed electrical capacity of photovoltaics, adjusted for self-consumption (net output).

The rapid expansion of the installed capacity of renewable energies has a direct reducing effect on the emission intensity of electricity generation and - with an increasing electrification of other sectors - also on the transformation outside the energy industry.

Key points

  1. The expansion of photovoltaics has been massively accelerated in 2023 and 2024, so that 100 GW of PV capacity was installed by the end of 2024.
  2. Based on the expansion in 2024, the target of 215 GW PV capacity in 2030 is achievable.

Share of renewable power in the overall net power generation

75% too slow Compared to the scenario Technology Mix

Share of renewably generated electricity (from wind, water, biomass, by means of photovoltaics and geothermal energy) in the total net electricity generation.

Increasing the share of renewables in electricity generation is the most important driver of the decarbonization of the energy industry. The positive trend since 2015 is primarily due to the expansion of the installed capacity of wind turbines and photovoltaics. The share of renewable electricity generation rose sharply in 2023 and 2024 in particular. In 2024, almost 60% of electricity was generated from renewable energy sources.

Key points

  1. Increasing the share of renewables in electricity generation is the main driver for energy decarbonization.
  2. According to Ariadne target scenarios, renewables make up a share of 73-84% of the electricity generation in 2030.
  3. The pace of renewables expansion in 2023 and 2024 needs to be continued to meet the policy targets and the target corridor according to Ariadne scenarios in 2030.

Annual net power generation from coal, gas, and oil

179% on track Compared to the scenario Technology Mix

Annual net electricity generation from lignite, hard coal, gas, and oil-fired power plants (not including internal demand of plants).

CO₂ emissions from the energy industry are largely determined by electricity generation from fossil fuels - hard coal and lignite, natural gas and oil. In parallel with the expansion of renewables, also the phase-out of fossil-based power generation has to be pushed forward quickly.

Key points

  1. CO₂ emissions in the energy industry are largely determined by the generation of electricity from fossil fuels.
  2. The decline observed since 2017, particularly in coal-fired power generation, therefore has to continue in parallel with the accelerated expansion of renewables.
  3. A key policy instrument for this is the pricing of CO₂ emissions in the EU ETS.

Electric capacity of operating and planned hydrogen electrolizers

18% far too slow Compared to the scenario Technology Mix

Capacity (in terms of electricity used) of all operating and planned electrolyzers for the production of hydrogen.

The availability of renewably produced (climate-neutral, green) hydrogen is a crucial pillar of the energy transition to climate neutrality. Its use will become necessary where decarbonization cannot be achieved through electrification (e.g., as a feedstock and heat source for many industrial processes), and in the power industry during periods of low electricity generation from renewables.

Key points

  1. The use of hydrogen will become necessary in particular in industrial processes, in the energy industry in times of low generation from renewables, and as storage for excess renewable electricity.
  2. There is considerable uncertainty about the H₂ electrolysis capacities that can be realized in Germany by 2030.
  3. The German government's target of 10 GWel by 2030 requires a massive expansion of domestic electrolysis capacity.