Chancellor says renewables strength boosts East Germany's industrial outlook

The states of eastern Germany are benefitting from the transition towards a climate neutral economy and are well-positioned to emerge as a strong industrial hub thanks to their high share of renewable power, chancellor Olaf Scholz said at an economic conference for the region. “Eastern Germany knows how to handle change,“ Scholz said at the conference in Bad Saarow in the state of Brandenburg, pointing at the formerly communist eastern states’ transformation since their reunification with western Germany in 1990. The five larger eastern states and the re-unified capital city state Berlin were witnessing “a true reindustrialisation at the moment,” Scholz argued, pointing at major foreign direct investments such as by U.S. carmaker Tesla, Chinese battery producer CATL or tech companies like Infineon, Intel or Amazon. “Investors from around the world have decided to put billions into eastern Germany.” On the one hand, this had been made possible by the region’s strength as an industry location, such as established research institutions, a capable workforce and lots of free space for commercial projects, he added. Crucially, however, many municipalities in the eastern states today produced more energy than they use, especially from renewable power sources, the chancellor added.

“This is a self-made asset for the location whose importance is only set to grow further in future investment decisions,” he argued. “For the first time, we’ve reached the speed that is required in renewables expansion to meet our target of 80 percent renewable electricity by 2030. And this in particular was made possible also thanks to the eastern German states,” the chancellor said. However, licensing new projects was still taking too long due to requirements such as detailed environmental impact assessments for wind turbines or electrolysers. “We’re not even close to the finishing line, this I want to make clear. But we’re working hard to get there,” Scholz said, adding that Germany could no longer afford to put energy infrastructure expansion on hold “to protect a flower that could also grow a few metres away.”

Scholz said eastern Germany’s economy had gone through “an enormously successful development” in recent years. Twenty years after the EU’s eastern enlargement in 2004, these German states positioned themselves at the union’s core, by actively pursuing cross-border projects with neighbouring countries, the chancellor argued. The region had thus proven its ability to navigate difficult changes, as it would also have to do so in the future, with decarbonisation and digitalisation being two key drivers of change. However, many citizens in Germany fear that they cannot keep up with the pace of change and to lose control over their own fate. “Extremists today try to exploit these uncertainties as they used to already in the past,” Scholz argued. But attacks on peaceful political debate and European integration would achieve the opposite of what people are hoping for, he added. “Those who threaten our democracy, who want to damage the European Union, they threaten our jobs and our prosperity. They threaten our security,” the chancellor from the Social Democrats (SPD) warned with a view to the far-right, anti-EU, and anti-climate action party Alternative for Germany (AfD). While currently suffering from a series of scandals ahead of the European election on 9 June, the AfD has repeatedly polled as the strongest party for upcoming state elections in the eastern states of Thuringia, Saxony and Brandenburg in September.

Scholz said that Germany faces “cyclical and structural weaknesses” regarding its economic growth prospects, arguing that consistent reforms are needed to regain competitiveness. Solving labour shortages, reducing bureaucracy and ensuring affordable energy prices were among the most urgent challenges that the government had already started to take on, he added. Energy prices in Germany have fallen markedly since they spiked during the energy crisis, and now often were even cheaper than before 2022. “This was partly achieved by the market – and partly by us in the government,” the chancellor said. Migrants and refugees as well as the targeted recruitment of workers from abroad all could help solve worker shortages, one of Germany’s most acute economic problems that particularly affects the more rural eastern regions.