Pandemic could slow German energy transition as households reconsider investments – KfW

The economic effects of the corona pandemic could slow the energy transition in Germany as private households reconsider climate-friendly investments such as heat pumps or electric cars, the country's state-owned KfW Development Bank has warned. "Long-term investments are examined more critically in uncertain times or are not implemented at all," the bank stated in a press release. "The efforts for climate protection and progress in the energy and transport transition are thus threatened by the crisis." The bank called for policy incentives to encourage household investments which it considers key to the energy transition. "The regulatory framework must be designed to strengthen climate-friendly investments and make climate-damaging investments less attractive," said chief economist Fritzi Köhler-Geib. "A rising CO2 price with simultaneous relief for climate-friendly technologies and behaviour would be a further sensible step."

The KfW's "Energiewende barometer" survey, which was conducted earlier this year before the pandemic hit, revealed ongoing support for the energy transition among German households. Around 90 percent of respondents said they considered the energy transition important or very important, unchanged from previous surveys. But KfW said household investments in climate-friendly technologies do not reflect the high approval rates as only 20 percent said they saw large cost-saving potentials in electricity, heat, or mobility, while many said investment costs were too high. The survey also revealed that climate change has become more tangible. "Two thirds of households see themselves affected by climate change now or in the future," Köhler-Geib said. "This underlines the urgency of implementing the energy transition."

Surveys regularly show that the German public remains strongly in favour of the transition to a low-carbon and nuclear-free economy, even if a high percentage criticize how it is implemented.