“There is a high degree of uncertainty for the projects currently being planned for the period after 2020 due to the current political and economic conditions,” BDEW head Kerstin Andreae said, forecasting planned investments by power suppliers this year and next are set to fall to levels not seen since 2013.
Key energy policy legislation has been held up in government and parliament for months, undermining planning security for companies and investors in the sector. While the nuclear phase-out by 2022 is regulated, the coal exit act and law amendments for wind and solar power development have yet to be approved.
Coronavirus response could accelerate energy transition
For months, policy makers have been focussed on how to contain the coronavirus while limiting the economic impact of the crisis. But the German Economic Institute (IW) stressed this mean key energy policy measures have to now be delayed.
“Instead, some should even be accelerated,” said IW’s Thilo Schaefer, head of environment, energy and infrastructure. “For some time there has been a lack of clear and reliable perspectives for climate-friendly investments, such as in decarbonising the industry sector.” In this context, he called for an early reduction of the renewable energy levy (EEG levy) to reduce the cost of electricity for households and industry.
Tax credits for green energy investment
The German finance minister Olaf Scholz said a stimulus package oriented toward international climate targets and Germany’s goal of becoming carbon neutral by 2050 would "make sense," as soon as the most pressing phase of the pandemic has ended.
Proposals include clean energy tax credits, requirements that bailed-out industries like airlines commit to emissions cuts, and investments in green infrastructure. This approach could both ensure that climate action is not neglected during the crisis, and help Germany stay competitive in energy transition technologies, a sector that could be worth about 23 trillion dollars by 2030, according to the World Bank.