The economic crash of the Federal Republic has multiple causes. Yet the self-inflicted energy crisis looms above all. A study commissioned by the Germany's Association of German Chambers of Industry and Commerce (DIHK) highlights regulatory and technical failures of the energy transition – but still clings to Net Zero.

The phase of diagnosing Germany’s economic disease should long be over. The numbers are devastating: since its best year in 2018, German industry has been producing on average 15% fewer goods, while falling over 21% short of potential growth. Every social system, the entire state apparatus, depends on at least 1.5% real growth per year. The widening deficits in social funds are the direct result of this economic catastrophe. And the root cause, as business leaders across the country complain, is the energy crisis that has crushed Germany’s competitiveness.

The Study: Energy Transition Costs

Frontier Economics, commissioned by the DIHK, estimates the total cost of the Energiewende, or Energy Transition, by 2049 at up to €5.4 trillion. Energy imports alone account for €2.3 trillion, with €1.2 trillion for massive grid expansion, another €1.1–1.5 trillion for energy generation investments, and €500 billion for plant operations.

These are not marginal corrections but a massive capital lock-in with no productive economic return. Particularly alarming is the projected rise in annual investment: from €82 billion today to between €113 and €316 billion after 2035. That’s 15–41% more than all private investment in Germany in 2024. In other words: the Energiewende doesn’t just consume capital – it crowds out investment, growth, and prosperity.

DIHK president Peter Adrian states bluntly: the burdens of the energy transition now endanger not only competitiveness but also prosperity and social acceptance. Energy-intensive industries – chemicals, metals, basic materials – are increasingly relocating abroad.

What appears as “climate protection” on paper is, in practice, the offshoring of jobs, capital, and industrial substance. The value creation disappears from Germany, while emissions are simply produced elsewhere.

Adrian warns of “excessive transformation pressure”: politically decreed targets, based on wishful thinking rather than economic reality, inevitably lead to misallocations. Investments flow into unproductive projects, bureaucracy blossoms.

The Combustion Engine Ban as Red Line

Let’s call it what it is: the German economic model – built on world-leading drivetrain technology, cheap energy, highly skilled engineers, technical know-how, and flanked by the soft euro – has been systematically and deliberately destroyed by political diktat under the Green Deal.

Disruptions, broken supply chains, disinvestment – these are the consequences of German energy policy. Its regulatory framework alone has been enough to derail a developed economy.

A genuine economic elite and a political class interested in the well-being of its people would act at the very heart of German industry – starting by scrapping Brussels’ combustion-engine ban, no ifs or buts. But today’s politics offer nothing but endless deferrals of reform into internal committees to avoid facing reality.

That the DIHK – living off compulsory membership fees – glosses over this problem fits the wider state of Germany’s economic elite: submissive to politics, sometimes bought with subsidies, often simply too cowardly to tell the public the truth about the state of their businesses.

Free Market as Media Solution

The media spin should be simple: on the basis of a study like Frontier Economics’, one could call for technology-neutral solutions and genuine competition. Instead of rigid prescriptions, different approaches could compete openly – combustion technology as much as electric mobility. Only in such a fruitful contest can it be shown which solutions are efficient, viable, and beneficial to both consumers and companies.

But alongside political inertia and ideological blindness, the sweet poison of subsidies – the very foundation of Brussels’ centralized power machine, with Berlin as a satellite office – has seeped in so deeply that all remain stuck in a dead end.

The EU, and equally its member states, is grotesquely over-bureaucratized. Its Kafkaesque administration perpetuates itself with ever more regulation – from the Supply Chain Act to the EUDR deforestation law, to censorship laws like the Digital Services Act and Digital Markets Act now fiercely opposed by the U.S. All of this is on the table, and yet there is too little public outcry to force change.

Some fear an overheated uninhabitable earth, while others simply hope month by month that the subsidy stream doesn’t dry up.

Rigidly Staying the Crash Course

The Frontier Economics study identifies regulatory problems and discusses the design of the energy transition as defined by the Green Deal. Yet the authors remain committed to the official goals of “climate neutrality” and CO₂ reduction – despite scientific evidence showing the alleged climate damage from CO₂ is unproven. No course correction, just a cosmetic sidestep that changes nothing structurally.

The recipe remains systemic: a touch less bureaucracy, a sprinkle of “technology openness,” a little flexibility on deadlines – and voilà, no one is forced to question the path itself. The Green Deal, centerpiece of the EU’s regulatory machine, is not challenged. Thus the Energiewende remains a gigantic redistribution and control project, the bill for which is paid by citizens and businesses.

A true “Plan B” would only be serious if it challenged the ideological foundation itself – and that does not happen. The study will serve politics as a fig leaf to continue the course, while offering some deregulation rhetoric to buy time, as Germany marches toward an economic catastrophe.

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Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.