Berlin, 7 January 2025. Germany witnessed a significant decrease in its greenhouse gas emissions in 2024, marking a positive stride in its climate goals. According to preliminary calculations by the independent think tank Agora Energiewende, emissions fell by 3 percent, or 18 million tonnes, reaching a total of 656 million tonnes of CO2. This represents the third consecutive year of decline, achieving a historic low for the nation, although the pace of reduction has slowed compared to the previous year. Despite this overall progress, a deeper analysis, particularly from initiatives like Agora Transport, reveals persistent challenges, especially within the transport sector, hindering Germany from fully meeting its climate commitments.
This data, presented in Agora Energiewende’s annual report for the energy year 2024, indicates that Germany surpassed its national reduction target under the Climate Protection Act by a substantial 36 million tonnes of CO2. However, this achievement is overshadowed by failures in specific sectors. Insufficient emission reductions in both buildings and, critically, transport, meant Germany missed European climate targets set under the Effort Sharing Regulation (ESR) by an estimated 12 million tonnes of CO2. When compared to the benchmark year of 1990, Germany’s total greenhouse gas emissions in 2024 were down by an impressive 48 percent.
The energy sector emerged as the primary driver of this emissions decline, contributing over 80 percent of the total reductions. A significant move was the decommissioning of coal-fired power plants with a combined capacity of 6.1 gigawatts in 2024, representing 16 percent of Germany’s total installed coal capacity. This capacity reduction was effectively compensated by record-breaking renewable energy generation, which accounted for 55 percent of gross electricity consumption, and increased electricity imports, 49 percent of which were from renewable sources. Notably, these positive changes occurred despite stable electricity demand, and were accompanied by an average 18 percent decrease in electricity exchange prices, falling to 78 EUR/MWh from 95 EUR/MWh in 2023.
Simon Müller, director of Agora Energiewende Germany, commented on these findings, stating, “Climate protection measures taken in recent years are increasingly having an effect on the electricity sector. With a significant increase in renewable energy and the positive trend in grid expansion, Germany is paving the way for a successful transformation in all sectors. At the same time, the country is increasingly benefiting from falling emissions and cheaper prices on the electricity exchange.”
However, the progress seen in the energy sector was not mirrored in the demand sectors of industry, buildings, and transport. In fact, investment in climate-neutral technologies such as heat pumps and electric vehicles actually decreased compared to the previous year. Industrial emissions slightly increased by 3 million tonnes of CO2, despite economic stagnation, primarily due to increased fossil fuel consumption in heavy industry. While the buildings sector saw a minor emission reduction of 2 million tonnes of CO2, this was largely attributed to milder weather conditions reducing heating demand, rather than structural improvements. Crucially, if weather patterns had been consistent with 2023, emissions would have risen.
The transport sector’s performance is particularly concerning. A minimal reduction of just 2 million tonnes of CO2 was achieved, mainly due to a decrease in heavy goods traffic resulting from the weak economy. Simultaneously, passenger vehicle traffic saw an increase. Overall, the transport sector emitted 144 million tonnes of CO2, significantly missing its annual target under the Climate Protection Act by a wide margin of 19 million tonnes of CO2. These failures in the buildings and transport sectors mean the German government may need to purchase emission allowances from other EU member states or face substantial fines, posing a considerable budgetary risk. Agora Transport and similar analyses emphasize the urgent need for targeted interventions in this sector.
Müller highlighted a key factor hindering structural change in industry, buildings, and transport: “One key reason for the lack of structural changes in the industry, buildings and transport sectors that would contribute to climate protection is the sense of uncertainty among households and companies. This led to a general reluctance to invest – despite an overall decline in electricity costs in 2024.” This uncertainty is reflected in the significant drop in sales of heat pumps (44 percent) and new registrations of electric cars (26 percent) compared to the previous year. “In the next legislative cycle, it is important to transfer the momentum for change seen in the electricity sector to the demand sectors. Policies that ensure social balance and enable households and businesses to invest in climate neutrality are central to this. The coming legislative period is crucial for making the necessary investments so Germany can achieve its national and European climate targets.” The insights from Agora Transport underscore the specific policy adjustments needed to address the transport sector’s stagnation.
Renewables, Imports, and Flexible Electricity Use Drive Energy Sector Emissions Cuts
Despite a slight uptick in overall electricity demand, the energy sector’s emissions fell significantly to 183 million tonnes of CO2 in 2024, an 18 million tonne (9 percent) decrease from 2023. This substantial reduction was driven by increased electricity generation from renewable sources (+12 TWh) and a rise in electricity imports from neighboring European countries (+12 TWh). Nearly half of these imports (49 percent) originated from renewable sources, accounting for 5 percent of Germany’s total electricity consumption. Nuclear energy continued to contribute approximately a quarter of electricity imports, consistent with the previous year. These imports contribute to lower electricity prices for German consumers and businesses. Furthermore, the integrated pan-European electricity exchange enhances security of supply, reduces reliance on fossil fuel power plants, and consequently lowers emissions across the European electricity grid. In Germany, conventional electricity production totaled 210 TWh in 2024, an 11 percent decrease, largely due to a 16 percent reduction in coal-fired power generation compared to 2023. Gas-fired power generation remained stable.
The average electricity exchange price fell by 18 percent (17 EUR/MWh) to 78 EUR/MWh compared to 2023. Consumer electricity prices for both industrial and residential users also decreased in 2024, reflecting ongoing price adjustments from the high levels of 2022/2023. New customer contracts for private households offered particularly significant savings.
Increased volatility in the electricity exchange market was observed in 2024, driven by the growing share of renewable electricity in the grid. “Periods with ample wind and sunshine result in a lot of renewable electricity, which can lead to low or even negative electricity prices. Our calculations show that such periods occur much more frequently over the course of the year than a “Dunkelflaute” – a period of little wind or sunshine,” Müller explained. “Overall, the price-lowering effect of such periods with high renewables generation is twice as significant as the price peaks seeing during a Dunkelflaute.” To fully capitalize on periods of abundant, low-cost renewable electricity, enhancing consumption flexibility is crucial. “This requires more electricity storage, faster installation of smart meters and incentives for more flexible demand from large-scale industrial consumers. A reform of grid charges is crucial here, because the current price structure really hampers flexibility.”
Wholesale gas prices generally decreased in 2024 compared to the energy crisis peaks of 2021-23. However, prices rebounded in the latter half of the year, partly due to global LNG market dynamics. This price volatility underscores that sustained low and stable energy prices are contingent on a decisive transition from fossil fuels to renewable energy sources.
Renewable Energy Expansion: Solar Boom and Onshore Wind Momentum
The expansion of renewable energy continued its positive trajectory in 2024, with renewables contributing 55 percent to gross electricity consumption. Solar PV capacity additions surpassed the 2023 record, reaching approximately 16 gigawatts. While onshore wind capacity additions remained lower at 2.3 gigawatts, auction results and permitting data indicate a trend reversal. Auctions in 2024 awarded a record 11 gigawatts of new onshore wind capacity, and permits for new onshore wind projects rose to nearly 13 gigawatts, almost triple the level from two years prior. Offshore wind auctions were also successful, awarding 8 gigawatts of new capacity.
Industrial Emissions Rise Despite Economic Stagnation
Industrial electricity prices presented a mixed picture. Prices for industrial customers decreased compared to 2023 due to lower procurement costs and a significantly reduced electricity tax, bringing prices for smaller industrial and commercial enterprises back to 2021 levels. However, large energy consumers continued to pay significantly more than before the energy crisis.
Greenhouse gas emissions from German industry totaled 158 million tonnes of CO2 in 2024, a slight increase of 3 million tonnes (2 percent) compared to the previous year. Increased fossil fuel consumption in energy-intensive industries outweighed the general decline in production across all sectors. Despite this increase, industrial emissions remained 10 million tonnes of CO2 below the indicative annual target for the sector.
“Rising industrial emissions combined with a stagnating economy show how urgently we need structural measures for climate protection. Industry in particular has enormous potential to switch from fossil fuels to electricity-based processes,” Müller emphasized. He acknowledged the previous government’s efforts in establishing frameworks such as carbon contracts for difference, the European IPCEI funding programme for hydrogen, and the approval of Germany’s hydrogen core grid. However, investment reluctance persists, fueled by concerns about potential energy price increases. “2024 shows a clear recovery in electricity prices, yet prices for particularly energy-intensive companies are still well above pre-crisis levels. Electricity is also still too expensive compared with gas. For a climate-neutral recovery of the economy, further measures are therefore needed in the next legislative period, including a reduction in electricity tax, a fundamental reform of grid fees and unbureaucratic incentives for investments in climate neutrality and flexibility,” Müller concluded.
Buildings and Transport Sectors Fail to Deliver Emission Reductions
The building sector again failed to achieve significant emission reductions in 2024, with only a 2 million tonne CO2 decrease compared to the previous year. Emissions from the building sector reached 105 million tonnes of CO2, exceeding the Climate Protection Act’s target of 96 million tonnes. This minor reduction was primarily due to reduced heating demand from mild weather, with limited structural changes taking place. Heat pump sales plummeted by 44 percent year-on-year, to around 200,000 units, and the struggling construction industry resulted in a historically low energy-efficient renovation rate of 0.61 percent in the last quarter.
“Emission reductions in the building sector are essential for achieving Germany’s climate targets. The Buildings Energy Act of 2023 created a solid foundation that needs to be further built on in the coming legislative period. Citizens need urgent clarity so that they can proceed with replacing their heating systems. At the same time, it is important to cushion social hardship in the transition and to provide targeted investment support to households in need,” Müller stated. He emphasized the importance of retaining core elements of the Building Energy Act, particularly the 65 percent renewable energy rule, to build confidence and investment security for both consumers and German heating firms. He also advocated for a more nuanced subsidy design for private households, increased federal funding for efficient heating networks, a permanent electricity price for heat pumps, and greater support for large-scale heat pumps and climate-neutral CHP facilities.
The transport sector mirrored the building sector’s stagnation, achieving only a 1 percent (2 million tonne CO2) emission reduction, totaling 144 million tonnes of CO2. This figure significantly exceeded the Climate Protection Act’s target of 125 million tonnes of CO2. The decrease in heavy goods traffic was offset by an increase in passenger vehicle traffic. New registrations of fully electric cars were considerably lower than the previous year, falling short of the target of 15 million electric cars by 2030. While a 6 percent increase in public transport passenger numbers in the first half of the year, largely due to the Deutschlandticket, is encouraging, the transport sector remains off track in terms of climate, industry, and social policy goals. Agora Transport’s ongoing analysis highlights the need for comprehensive policy reforms in this sector.
To rectify this, the next legislative period requires additional measures and a clear strategy, including a timely reform of taxes, levies, and subsidies for passenger cars based on CO2 emissions, encompassing vehicle and company car taxation, CO2 prices with a climate bonus, and polluter-pays car tolls. Supporting the auto industry’s transformation, fostering a strong domestic market for electric vehicles through incentives for commercial fleet electrification and cheaper smaller electric vehicles, and continued rapid expansion of charging infrastructure are also crucial.
Effective Policy Mix and Sound Financing for Transformation
Successful climate and energy policies in the upcoming legislative period necessitate a structurally sound financial foundation for the transformation across all sectors. This includes targeted support for private investments, relief measures for citizens and companies during the transition, public infrastructure investments (especially at the municipal level), and international climate finance.
“Our latest analyses clearly show that climate protection constitutes the basis for a competitive economy, increases energy security and can strengthen social inclusion. For the coming legislative period it is therefore crucial that Germany stays on the ball when it comes to climate and energy policy. The prerequisites for this are an effective policy mix and a solid financial basis for the transformation,” Müller concluded. “Climate protection remains a generational task for which courageous political decisions and resolute, non-partisan cooperation between businesses, civil society and politics are now needed more than ever.”
For a detailed understanding, the German-language study “Die Energiewende in Deutschland: Stand der Dinge 2024” provides a comprehensive overview of Germany’s energy transition and climate targets in the past year. It includes an English summary and is available for free download at www.agora-energiewende.de.
*For better readability, the precise term CO2-eq is not used: This refers to all greenhouse gas emissions, including substances such as methane and nitrous oxide, which are included in the emissions balance as CO2 equivalents.
