The reduction caused by the industrial slump is not sustainable, a think tank has warned

A slump in industrial production and an economic downturn in Germany, Europe’s biggest economy, have caused carbon emissions to drop to their lowest level in seven decades, a German think tank has reported.

Last year, Germany’s greenhouse gas emissions fell to 673 million tonnes of CO2, which represents a 46% drop compared to the reference year 1990 – their lowest level since the 1950s, Agora Energiewende, a non-profit think tank advocating for energy transition, said in a press release on Thursday.

CO2 emissions were well below the annual target stated in the Federal Climate Protection Act, the organization added, citing its preliminary calculations.

The think-tank named a significant drop in electricity demand among the factors behind the reduction. Coal-fired power generation fell to its lowest level since the 1960s, it said.

“Economic situation and international crises” also saw production by energy-intensive companies decline, which drove emissions from industry down, the think tank explained. According to preliminary figures, energy-intensive production fell by 11% in 2023, it added.

Germany, the EU’s economic powerhouse, has seen a decline in manufacturing and new factory orders in 2023. The German economy shrank in the 2nd and 3rd quarters of last year compared with 2022, according to figures from Germany’s statistics agency, Destatis. The country has become the worst-performing major developed economy in recent months.

“An important factor in the slump in production was the ongoing price rise in the European gas market due to the switch from cheap pipeline gas to more LNG imports,” Agora Energiewende wrote, describing the development as “the fossil fuel crisis.” EU countries, including Germany, dramatically cut imports of natural gas, coal, and oil from Russia in 2022 as part of their Ukraine-related sanctions campaign, leading to a massive hike in prices. Energy prices have since gone down but remain above their pre-crisis levels, the release noted.

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According to the think tank, the emissions reduction seen in the industrial sector is not sustainable. “The drop in production due to the energy crisis weakens Germany’s industrial base. If emissions are simply shifted abroad as a result, this won’t benefit the climate,” said Simon Müller, director of Agora Energiewende Germany.

The drop in emissions was also achieved by Germany importing more electricity from neighboring states and a 5% increase in renewable energy production. According to the think tank, wind and solar energy supplied more than 50% of total gross electricity demand for the first time in 2023.

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