Energy transformation receives a more optimistic outlook from northern businesses, yet criticisms prevail over praises
The Association of North German Chambers of Industry and Commerce (IHK Nord) has released the results of a regional evaluation on the Energy Transition Barometer. The survey reveals a shift in perception towards the energy transition among North German companies, with more companies expressing a positive view and fewer expressing negative views.
Key points regarding the impact on competitiveness and concerns about energy prices include:
- Rising Energy Costs and Economic Risks: German businesses, including those in North Germany, face higher energy prices due to the phase-out of coal and nuclear power, the cessation of Russian gas imports, and investments needed to expand renewables and LNG/hydrogen infrastructure. These elevated costs directly affect manufacturing and energy-intensive industries such as steel, cement, and chemicals, challenging their pricing and global competitiveness.
- Demand for Stable Regulatory Frameworks: Companies insist on uniform, reliable regulatory frameworks to facilitate long-term planning and investment. Legal uncertainties and policy reversals create business risks and discourage investment, impacting competitiveness negatively. They call for simplification and harmonization of sustainability reporting requirements suited to company size, to avoid undue burdens on small and medium enterprises.
- Government Focus on Affordability and Efficiency: The German government is conducting a "reality check" to ensure energy transition policies balance affordability, supply security, and climate goals. This reflects recognition that energy costs and infrastructure expansion affect economic competitiveness and energy-intensive companies' viability.
- Market Volatility and Investment Dynamics Exemplified by RWE: Even major energy companies like RWE have experienced earnings volatility due to factors like fluctuating wind conditions and gas prices, illustrating broader transitional challenges. Yet, they continue large-scale investments in renewables, viewing the energy transition as a long-term positive despite short-term pressures.
However, the survey did not specify whether the companies fearing a loss of competitiveness due to energy prices are among those that view the energy transition positively or negatively. Moreover, the reasons for the increased positive assessment of the energy transition's impacts on competitiveness are not given. The survey results also do not provide specific details about the industries or sizes of the participating companies.
Despite these gaps, the increase in companies expressing concerns about energy prices is significant. Nearly 40% of companies, as reported by IHK Nord, fear a loss of competitiveness due to energy prices, an increase from the previous year's 33.9%. At the same time, almost a third (31 percent) of companies assessed the impacts as very negative or negative, a decrease of 6.9 percentage points. The concern about energy prices is not limited to the manufacturing industry, according to the chairman of IHK Nord, Thomas Buhck.
In summary, North German companies are caught in a complex transition where long-term goals of renewables and climate neutrality increase energy costs and regulatory complexity, thereby impacting their competitiveness. Their main concerns focus on ensuring stable, predictable policies, managing rising energy prices, and receiving support to sustain investment amid these structural changes.
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