High prices spurred significant drop in German industry’s energy use in 2022

Energy consumption in Germany’s industry dropped 9.1 percent in 2022  compared to the previous year, Germany’s Statistical Office (Destatis) has found. Natural gas use fell by more than 17 percent but the fossil fuel remained the most used energy carrier among industrial companies, accounting for 28 percent of all use. It was followed by directly-used electricity (21%), oil (18%), and coal (15%). By far the most energy for industrial purposes (89%) was used for heating and power production, while 11 percent was used to produce basic materials, such as chemicals or plastics. “The significant reduction in energy consumption is primarily due to high energy prices,” Destatis said. With just over 7 percent, however, energy consumption in energy-intensive industries fell slightly less than in industry overall. Chemicals producers were the largest group of energy consumers in the industry sector, accounting for more than 28 percent of total demand, partly because roughly one third of the energy is used for material production. Steel and metal production consumed 22 percent, while coking and mineral oil processing accounted for 10 percent each. The statistical office’s data included the energy use of some 47,000 companies in the production sector and extractive industries.

The price hikes for energy, particularly gas, have contributed to a “historic low” in Germany’s medium-run growth prospects, a recent report by the Council of Economic Experts found. Observers fear that the loss of access to cheap Russian gas and generally higher energy prices in the wake of the invasion of Ukraine could hamper industrial recovery. However, there is also hope that reforms at the national and the European level to increase efficiency as well as accelerate and better coordinate the roll-out of renewables, green hydrogen and other low-carbon technologies will trigger lasting improvements for the industry sector.