German manufacturing firms are looking at options as sky-high energy costs weigh on bottom line

German manufacturing firms are considering scaling back production or relocating operations as the high cost of energy in the renewable-committed nation cuts into their profits, according to a new survey. 

The German “2024 Energy Transition Barometer,” which was published by the Association of German Chambers of Industry and Commerce, surveyed firms employing 500 people or more. 

“The trust of the German economy in energy policy has been severely damaged. Policy makers have failed to show companies that they can have reliable and affordable energy supply,” said Achim Dercks, the association’s deputy managing director, according to OilPrice.com. 

A report in May from the Federation of German Industries concluded that Germany had lost a decade’s worth of growth in production since before the outbreak of the pandemic in 2019. 

Germany has been a leader in renewables, with half the country’s electricity demand coming from wind and solar. While proponents have promised lower energy costs from increasing shares of wind and solar, Germany has seen the opposite. 

High energy costs are having similar impacts on energy across Europe, according to energy expert Robert Bryce. Industries from chemicals to aluminum have reduced or ceased production in 2022 and 2023.