Climate crisis threatens German industry: energy costs and bureaucracy are rising!

Climate crisis threatens German industry: energy costs and bureaucracy are rising!

On July 19, 2025, Germany will face crucial challenges that affect the future of industry. The debate is increasingly focused on high energy costs, bureaucracy and a green transformation. The economic consequences of climate change often seem to be overlooked, even though climate change is considered a serious threat to the competitiveness of the German economy Time reported. These consequences not only indirectly affect industry, but also directly undermine the foundations of economic activity.

The complex supply chains, which have been the subject of heated discussions in recent years, are particularly affected. Extreme weather events have already caused billions of euros in damage. A striking example is the Rhine low water crisis of 2018, which caused BASF additional costs of 250 million euros. The Rhine's freight capacity fell by up to 80 percent, which significantly affected logistics.

Climate change and its consequences

The perceived urgency of the issue is supported by data. In the summer of 2022, over 8,000 people in Germany died due to extreme heat, while the heat also reduced labor productivity in industry and construction by up to 10 percent. According to estimates by the Federal Ministry of Labor, this leads to around three million lost working days and economic costs of around seven billion euros annually. These developments signaled that without preventive measures, government finances could come under significant pressure.

Another devastating disaster was the flood in the Ahr Valley in 2021, which caused damage worth over 33 billion euros, of which only a third was insured. The serious implications are also evident in the context of agricultural yields. In years of drought, grain and corn yields fell by up to 25 percent. The German Farmers' Association estimates the damage for 2022 at around 3.6 billion euros.

Economic prospects under pressure

But it's not just nature that is suffering, companies are also increasingly doubting the infrastructure and planning security in Germany. A survey by the European Investment Bank shows that 64 percent of EU companies are suffering losses due to climate change. According to a survey by the Association of German Chambers of Industry and Commerce (DIHK), 40 percent of German industrial companies are considering relocating abroad because high energy costs are becoming threatening.

Confidence in Germany as a location is dwindling - not only because of energy prices, but also due to inadequate adaptation to ecological realities. An urgent change of course in climate and industrial policy is called for. Proposals such as a “climate solidarity” and investments in climate-resilient infrastructure are being discussed. The idea that prevention through climate protection could be cheaper in the long term than repairs after disasters is becoming increasingly important. According to studies, every euro spent on climate protection could save up to seven euros in follow-up costs.

With a view to future developments, Germany is at an economic policy crossroads: the costs of inaction must be weighed against the costs of climate protection. Climate change is manifesting itself hyperbolically in Germany through more frequent and intense weather extremes such as heavy rain, floods, storms, drought and extremely high temperatures, as well as that Federal Ministry of Economics highlights.

In the long term, the total costs of climate change could exceed the financial costs of extreme weather events. Necessary adaptation measures could help mitigate the brutal effects. The research report from the Federal Ministry of Economics examined in eight scenarios how climate protection investments and CO2 prices influence the overall economic impact. The aim is to achieve a comprehensive transformation of the energy and economic sectors, with investment requirements that could exceed 80 billion euros per year by 2035.

For the success of climate protection policy, clear political signals on decarbonization are essential in order to mobilize investments and create planning security.