First, it is important to note that the goal of climate neutrality in Germany and the European Union remains in place. In the EU, the target is set for 2050. In Germany, according to the climate protection amendment that came into force in July last year, the country aims to be greenhouse gas neutral by 2045. This goal was also reflected in the CDU’s election manifesto.

The key question now is how to achieve climate neutrality in Europe and Germany affordably – that is, at a reasonable cost. First, openness to technological innovation is essential. Second, from the perspective of the energy sector and my company, we need regulatory conditions that meet long-term planning and investment requirements.

There must not be legal changes every legislative period, meaning every few years. In our industry, investments often take 30 to 40 years to pay off. That’s why I strongly hope for stable, long-term regulatory conditions that provide investment security.

I don’t think so, as long as we, as an industry, propose solid concepts. We need more renewable energy. A strong argument in favour is that it is a very cost-effective form of energy generation. Yes, we are investing a lot of money now to restructure our energy system. We also need secured, flexible capacity – think of the Power Plant Security Act. Any new government must push this forward quickly.

Globally, especially in China and the US, we are seeing a massive expansion of renewable energy through different means and direct subsidies. In my view, there is no cheaper alternative to renewables in the long run. The recent sharp rise in gas prices also does not argue against further expansion of renewable energy.

Three aspects are important to me. The response to the crisis immediately after Russia’s invasion of Ukraine in February 2022 was remarkably good. I also find it impressive that, despite the war and its associated challenges, Germany managed to expand renewable energy, accelerate approval processes, and speed up project allocation. Unfortunately, we have also quickly fallen back into an old trap.

Excessive, overly detailed political regulations slow down and increase the costs of expansion. They also restrict innovation in companies and hinder progress. Speed – or time – is always money. I would like to see a political shift in this regard.

Clearly, Germany should continue the successful expansion of renewables. This also means ensuring that the infrastructure, especially the grids, can handle the influx of renewable energy. We need more flexibility on the consumer side, as well as in the way we integrate renewables into the grid.

That is pure deception because renewables are not only a very cost-effective but also a secure form of energy supply. Dismantling wind turbines, which would inevitably lead to dependency on gas and oil imports from Russia, would be a misguided path.

Unfortunately, there is no silver bullet. We have to solve multiple challenges simultaneously in a complex system. At the moment, secured capacity is the top priority. We need gas power plants and, in the long run, hydrogen power plants to compensate for energy shortages during periods with little wind and sun. Additionally, we can do a lot to minimise overall system costs. We must not only focus on the price per kilowatt-hour or the raw material costs of gas and electricity but also increasingly consider infrastructure costs, which are becoming a larger share of total costs. Here, we have great potential to reduce expenses by designing a smart system or optimising costs within the existing framework.

One example is the design of offshore wind farm auctions, which currently prioritise power output rather than maximising energy production at minimal cost. Another cost-saving measure would be using overhead power lines instead of underground cables. There are many ways to reduce costs. Another major aspect is the heating sector. In Germany’s total energy system, renewables currently account for only 20%. We still have a long way to go, and the heating and transportation sectors will play a crucial role in this transition.

I see three main pillars. First, we should work on reducing system costs on the path to climate neutrality. The European emissions trading system and CO2 pricing are crucial for reducing greenhouse gas emissions. These need to be complemented by other instruments such as a capacity mechanism. The market design should be adjusted to create stronger incentives for flexibility on the consumer side. We need a better contribution from all participants in the system, which would lower overall system costs. Second, we must make financing easier. We can do this by reducing investment risks for investors.

The third point is how the resulting costs from this highly condensed investment cycle will be passed on to consumers. In this context, the idea of a hydrogen core network and an amortisation account are, in my opinion, smart approaches. These investments in infrastructure span several decades but cannot pay off within a short period.

The hydrogen core network will be built and operated privately and financed through fees paid by hydrogen consumers. Initially, the number of users will be small, meaning the network operators' investment costs cannot be fully covered by usage fees. The idea is that the Federal Network Agency sets a cap on network fees, incentivising companies to switch to hydrogen. The resulting gap between necessary costs and the regulated fee would be covered by annual compensation payments from an amortisation account. This account would later be replenished as the user base grows and revenue increases. We should consider similar mechanisms elsewhere. Ultimately, the three key questions – how much will it cost, how will it be financed, and who will bear the costs – must be addressed together in context.

We, as the energy industry, have proposed many ideas demonstrating how pragmatic measures could have a significant impact. Regulation down to the last detail won't get us anywhere. At the EU level, there are rules with no clear added value, such as those related to the taxonomy. Simplification would save us significant administrative effort and reduce costs. We, as companies, have entire departments dedicated solely to regulatory compliance just to implement projects and secure financing.

Scaling is necessary. We need to move beyond small-scale pilot projects or test labs and enter the scaling phase. This is already happening. The decision on the hydrogen core network provides an important boost on the infrastructure side. At EWE, we have been awarded four major projects of common European interest, known as IPCEI, which paves the way for a total investment of up to 1 billion euros. We are already in the process of implementing one of Germany's largest electrolyzers, with a capacity of 320 gigawatts, in Emden, including the necessary pipeline and storage connections.

We also need customers on the demand side who are willing and able to pay for hydrogen. Sticking with the example of the steel industry, companies have received subsidies to transition from the environmentally harmful blast furnace process to direct reduction technology. However, the decisive factor in the long run is operating costs. Due to excessive and ecologically counterproductive requirements from Brussels regarding electricity procurement criteria for green hydrogen production, we are forced to produce at unnecessarily high costs. A simple adjustment could reduce the cost of green hydrogen by 50%. The EU can now demonstrate its commitment to affordable energy with its action plan. The second part of the equation is climate protection contracts, which are still in the planning stage.

I believe that would be the right move. Another option would be to create so-called green lead markets, where companies are allowed and enabled to purchase certain quotas of their steel as green steel. This would generate a pull effect. There are many mechanisms that could get things moving. What is important to me: we need not only green hydrogen but also blue hydrogen initially to facilitate this ramp-up, enable scaling, and build trust in stable supply chains within the industry.

I consider the green transformation in Europe by 2050 to be absolutely necessary and feasible. But we should take a pragmatic approach and not focus on the last 5% of greenhouse gas reduction at this stage. We will see a lot of innovation in the next 10 to 15 years. Therefore, we should not be overly concerned about the final 5%. The biggest impact lies in the actions we take now. At the moment, we are looking at the wrong end of the energy transition.

It is a market-oriented and effective instrument to manage greenhouse gas reduction. There is currently a discussion about expanding this system to include heating and transportation sectors. I believe it is essential to go down this path. Otherwise, we will not achieve climate neutrality by 2050. However, all countries must participate because this is a global issue. Countries like the US and China rely more on tax incentives or subsidies for companies investing in renewable technologies. In Germany, companies must first pay a CO2 levy and only receive partial support for transitioning their operations. Yet, companies from China, the US, and Germany all compete in the global market. That is a challenge. The EU’s Carbon Border Adjustment Mechanism (CBAM), a new climate protection tool, helps only with imports into the EU. CBAM does not address exports. These different approaches – Europe pricing CO2 while other countries subsidise renewable investments – must be resolved quickly.

On a global scale, nuclear power will play a role in achieving climate-neutral energy production. However, we must also consider the individual status of each country. Take Germany, for example: 60% of our electricity mix already comes from renewables. This means we have a system that can provide large amounts of low-cost energy for much of the year. Expanding nuclear energy in Germany now would mean running nuclear power plants for only a few hours per year. That would be very expensive. Capital costs, not operating costs, are the determining factor here. It would be a very unwise and extremely costly combination.

Countries like France have a very high share of nuclear energy and plan to continue down that path. Nuclear energy is a highly capital-intensive technology. In Europe, we benefit from an integrated electricity market that allows for power exchange, such as between Germany and France. This means that imports of nuclear-generated electricity from France are part of Germany’s energy mix. In the summer, however, French rivers may not have sufficient water for cooling, forcing France to significantly reduce its nuclear power output. When that happens, France imports renewable electricity from Germany. This interconnected European energy network makes the system more resilient and cost-effective.

Since 2018, Stefan Dohler has been CEO of Oldenburg-based energy company EWE. Since June 2024, he has also been President of the German Association of Energy and Water Industries (BDEW). Before joining EWE, which is majority-owned by Weser-Ems municipalities, the trained seaman and aerospace engineer was CFO of Swedish energy company Vattenfall in Stockholm. Dohler, originally from Cochem on the Mosel, began his career in 1998 at Hamburg-based energy provider HEW, a predecessor of Vattenfall in Germany.

I find it extremely unlikely that Germany will economically justify reviving nuclear energy. If it were to happen, it would have to be a government-led initiative. But is there political consensus for that? Some election programmes suggested that nuclear fusion could have potential. However, that is a different type of nuclear energy and will not be available in the foreseeable future.

An analysis by the BDEW estimates that we will need around 700 billion by 2030 and approximately 1.2 trillion euros by 2035. But these numbers should be put into perspective.

There are ways to implement the energy transition smartly and reduce costs through system optimisation. Additionally, these figures do not represent the total extra costs of the energy transition. They primarily involve replacement investments – expenses that would have been incurred anyway – plus additional costs due to the rapid scaling and simultaneous transformation of the heating sector, power generation, and grid infrastructure. The urgency to achieve everything within a few years creates a high financing demand. However, we cannot simply impose these costs on consumers all at once. We need to find a smart financing approach.

There is a lot of money in the capital markets. But the energy sector also needs favourable investment conditions to attract this capital. Germany is currently failing to provide such conditions, particularly in grid infrastructure. The return requirements of international investors – whom we need – are not covered by the return on equity rates currently granted by the Federal Network Agency. Another issue, particularly affecting companies in the municipal sector – of which there are many in the German energy industry – is that they do not have direct access to the capital markets. Ways should be found to enable these companies to access financing instruments, for example through hybrid instruments. The goal is to expand the possible mix of financing options.

One possible step would be for the Federal Network Agency to set a higher return on equity for new investments by grid operators. Another measure, in my view, would be to provide security for certain investments, for example through a well-designed Renewable Energy Act. To further expand renewable energy, a framework that reduces risks would be beneficial. Lower risks make financing easier and more affordable. The BDEW and the Association of Municipal Enterprises have proposed an energy transition fund, which would enable companies in the sector that cannot raise capital directly on the stock exchange to access funds that function like equity without affecting their debt limits. The state would only need to provide certain guarantees for its own actions, such as an insurance mechanism. Based on this, private capital could be mobilised effectively.

The government understood the problem that needs to be solved. Many discussions have already taken place. Unfortunately, results are still lacking. The next federal government must take action. If we are unable to sufficiently finance the major upcoming investments in the energy sector, the energy transition will be slowed down. Alternatively, the transformation will become more expensive. Neither would be in our country's interest. And to be clear: this is not about imposing massive additional burdens on the state budget. We need a framework that ensures planning and investment security. The long-term costs for our economy and future generations resulting from inaction or delays far exceed the investments currently being discussed.