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On the way to becoming a climate-neutral industrial nation

German industry is undergoing fundamental change. The aim is to create a sustainable economy, for example by means of the energy transition and also the Supply Chain Act.  

Solar panels on an industrial building in the Ruhr region
Solar panels on an industrial building in the Ruhr region © picture alliance / imageBROKER

Whether automotive, mechanical engineering or steel: the major industrial sectors have shaped Germany for decades. Today, practically all sectors are undergoing a fundamental change – because Germany is looking to become a climate-neutral industrial nation by 2045. “This means we’re about to face the biggest transformation of our industry and economy in at least 100 years,” said Federal Chancellor Olaf Scholz in his first government declaration in December 2021.

The energy transition as the centrepiece of the transformation 

In the years to come, oil, coal, gas and nuclear power are to be almost completely replaced by wind, sun, water and biomass. By as early as 2030, at least 80 percent of German electricity consumption is to come from renewable energy sources. And the energy transition is making progress: according to the Federal Environment Agency, the share of renewable energies in gross electricity consumption rose to more than 50 percent in the first half of 2023. 

There are few regions in which the transformation of German industry is more visible than in the Ruhr region, Germany’s former coal region. At the end of 2018, the last coal mine closed in an area where there were once hundreds. “An era in German history is coming to an end here,” said Federal President Frank-Walter Steinmeier at the time.  

Federal President Steinmeier at the event to bid farewell to coal-mining in 2018.
Federal President Steinmeier at the event to bid farewell to coal-mining in 2018. © picture alliance/dpa

Germany wants to finally phase out the production of coal soon, including lignite. The Federal Government plans to achieve this goal by 2030: under law it must be accomplished by no later than 2038. The phase-out of nuclear energy has already been completed, with the last three German nuclear power plants being shut down in April 2023.

The road to a social-ecological market economy 

The energy transition is part of a shift from a social market economy to a social-ecological market economy. The Federal Ministry for Economic Affairs and Climate Action sees this as a “concept for the transformation towards climate neutrality”.  Industry itself must define what this transformation will look like in practice. There are already lots of examples, such as the plans of Germany’s largest steel manufacturer Thyssenkrupp to produce “green steel”. In Duisburg, the company is planning a plant that will run on climate-neutral hydrogen. 

Steelworker at Thyssenkrupp Steel in Duisburg.
Steelworker at Thyssenkrupp Steel in Duisburg. © picture alliance / SvenSimon

International responsibility in global supply chains 

German industry is closely interlinked on a global scale. In order to better protect human rights and the environment internationally, a new Supply Chain Act came into force at the beginning of 2023. Companies have a responsibility to ensure that human rights are respected throughout the supply chain, from raw materials through to finished products. Labour Minister Hubertus Heil describes this responsibility as follows: “If a company does business globally and makes profits globally, it has to assume global responsibility.”