Ariadne report shows cost-efficient pathways to climate neutrality 2024 in Germany
The new German government is still being formed, but one thing seems clear: the goal of climate neutrality by 2045 remains.
Researchers from the Kopernikus project Ariadne, with significant participation from the Potsdam Institute for Climate Impact Research (PIK), have now calculated how much this will cost. According to the study, the necessary investments will be largely offset by reduced spending on fossil fuels. Depending on the scenario, the additional cost of the transformation can be limited through cost-efficient climate protection to an annual average of 16 to 26 billion euros – 0.4 to 0.7 percent of current economic output – between now and 2045. European coordination of energy and climate policy is key to minimising costs.
The comprehensive scenario analysis produced by five Ariadne institutes provides the next government with important guidance for Germany’s future. “Decarbonisation, i.e. the phase-out of oil, coal and gas, requires a fundamental restructuring of our economy. This restructuring will lead to annual investments in the hundreds of billions,” says Gunnar Luderer, head of the Energy Transition Lab at PIK and deputy head of the Ariadne project, which is funded by the Federal Ministry of Education and Research. “But gross investment should not be confused with net costs. If the switch to innovative and efficient technologies is consistently pursued and these are intelligently networked, there will be high savings in fossil fuels. The aim is to transition to a more modern and efficient energy system.”
A large proportion will be financed from private funds
Accordingly, the energy transformation offers the opportunity to make Germany and Europe fit for important future markets. It is about the transition to a more modern and efficient energy system. Without the high ongoing fuel costs. As a result, the costs of climate damage caused by Germany from 2025 to 2045 will be more than halved. The researchers compare different cost-efficient pathways to climate neutrality, with varying levels of hydrogen demand, direct electricity use and general energy demand.
Before fossil fuel savings are taken into account, the energy transition leads to annual investments of 116 to 131 billion euros, on average, until 2045. These costs are driven by renewable energies and energy networks, as well as the energy-efficient renovation and electrification of industrial production, heating in buildings and road transport. Of this, 95 billion has already been induced by measures adopted to date. A large proportion of the investments will be financed from private funds, with the state playing a role primarily in infrastructure, the market launch of new CO2-neutral technologies and the reduction of additional burdens on private households.
Germany’s energy transition will only work in the European context
The share of wind and solar energy in the electricity mix will increase to between 84 and 91 percent by 2035, depending on the scenario. According to the researchers, the wholesale electricity price will stabilise in the long term at an annual mean of 70 to 80 euros per megawatt hour. Time-variable electricity prices create incentives for flexible consumption, while regional electricity prices, integrated system planning and more overhead lines help to improve cost efficiency. Overall, the necessary investment in the transmission grid between now and 2045 could be reduced by around 92 billion euros, ultimately lowering costs for all end users. Backup power plants and storage facilities can balance out demand peaks and periods of low sunshine and wind. And Germany’s energy transition will only work in the European context: the electricity union is important, as well as the development of a European hydrogen network, and the EU Emissions Trading System and its expansion to sectors not yet covered is crucial for cost-efficient climate protection.
In industry, the Ariadne scenario report expects additional burdens, especially from higher operating costs in areas that cannot be electrified, or can only be electrified with difficulty. This applies above all to primary industries, aviation and shipping. Hydrogen or e-fuels must be used as substitutes for fossil energy there. Greater material efficiency and recycling can save production costs. And the first processing steps of energy-intensive industries, such as steel production and basic chemicals, can be relocated to countries with potential for cheaper renewable electricity.
Consumer behaviour is also important
The heating transition in the buildings sector accounts for a large share of the investment needs, at 41 to 50 billion euros per year depending on the scenario. Additional costs arise here primarily from necessary building renovations. On the other hand, if you look at the complete life cycle, heat pumps can usually provide space heating more cheaply than fossil fuel systems: higher initial costs are offset by lower running costs. According to the study, this will also apply to almost all end users of electric cars by 2030 at the latest. In 2030, battery-electric cars and trucks will achieve an annual market volume of 80 billion euros in Germany.
The study also shows that the costs of climate protection are heavily influenced by the development of energy demand: if we succeed in reducing energy demand through climate-friendly consumer behaviour and in switching to fossil-free technologies, the energy cost savings could even exceed the climate protection costs.
Source
Potsdam-Institut für Klimafolgenforschung (PIK) e. V. 2025 | Ariadne-Projekt 2024
