Germany’s Energy Efficiency Act will lead to deindustrialization and economic shrinkage

_ Yuri Kofner, economist, MIWI Institute. Munich, 18 May 2023.

With the Energy Efficiency Act (EnEfG) passed in April 2023, the federal government led by the SPD, Greens and FDP will to burden Germany with an extremely planned economy and technology-hostile bureaucratic monster that will lead to further deindustrialization and a rapid economic decline.

Based on the EU’s “green” agenda, the bill imposes the following measures from 2024:

German primary energy consumption is to be reduced by 31 per cent (over 1,000 TWh) and final energy consumption by 22 per cent (over 550 TWh) by 2030 compared to 2022, or by 51 per cent (1,700 TWh) and 42 per cent (over 1,000 TWh) respectively by 2045. [1]

The federal government and the federal states will be forced to take measures to implement various EU requirements in order to enforce an annual reduction in final energy consumption of 45 TWh and 5 TWh respectively by 2030 from the economy and the municipalities. Bavaria in particular will be forced to reduce final energy consumption by almost 0.8 TWh per year by 2030, which would be equivalent to “shutting down” a city the size of Lindau on Lake Constance every year. By 2030, Bavaria will have to consume a total of over 5.3 TWh less, which would be equivalent to “switching off” the whole city of Regensburg.

As in the Soviet “Gosplan”, the federal government must submit its measures to reduce energy consumption to the European Commission in a so-called Integrated Climate and Energy Plan (NECP).

Almost all public bodies, de facto also including municipalities, are forced to reduce their final energy consumption by 2 percent annually and to introduce energy or environmental management systems.

All companies with an annual energy consumption of more than 15 GWh (usually large companies) will be forced to introduce costly energy or environmental management systems and to publish specially prepared energy saving plans. In total, more than 6,400 companies nationwide and almost 1,000 industrial companies in Bavaria are threatened by this requirement.

Data centres will be forced to comply with strict energy efficiency criteria, minimum air cooling temperatures, waste heat and renewable energy use specifications, introduce energy or environmental management systems and will be subject to the strictest information and reporting requirements.

All companies with an energy consumption of 2.5 GWh per year or more will be forced to reuse and reduce waste heat, comply with costly EU regulations and information and reporting obligations. Across Germany, more than 55,000 companies and in Bavaria alone almost 2,500 industrial enterprises are affected by this additional burden.

As a prime example of state arbitrariness, the federal government has also taken the right for itself to define “climate-neutral companies”, which are then henceforth exempt from all the above-mentioned burdens of the Energy Efficiency Act.


The planned Energy Efficiency Act is extremely anti-business and must be prevented at all costs for several serious reasons:

With its quotas and meticulous requirements at federal to company level, the Energy Efficiency Act is a planned economy dictate and thus in absolute contradiction to the principles of the social market economy. Socialism has failed miserably worldwide. Therefore, the new socialists are now trying to implement their planned economy fantasies under the guise of climate policy.

The Energy Efficiency Act is a wealth killer. According to estimates by the ifo Institute [2] and the DIHK [2], the implementation of the energy-saving requirements in the Energy Efficiency Act will reduce German GDP by 14 percent (542 billion euros) by 2030 compared to 2022, and this is without taking into account the above-mentioned bureaucratic burdens of the EnEfG. This corresponds to a net welfare loss of over 13,000 euros per household. This is because the plans of the German federal government call for a ninefold increase in the previous annual rate of decline in energy consumption by 2030 (22 percent compared to 2.5 percent). This difference is simply not achievable through further substantial energy efficiency measures, and can only be enforced through the closure or emmigration of domestic businesses.

The Energy Efficiency Act is hostile to technology and innovation. Calculations by Prognos AG on behalf of the Federal Ministry of Economics and Technology assume that the transition to e-mobility (34 TWh), the ramp-up of the hydrogen economy (10 TWh), the switch to heat pumps (17.5 TWh) and digitalisation through the construction of data centres (6.5 TWh) would increase total annual electricity consumption by 68 TWh by 2030. However, the EnEfG’s energy savings targets of 550 TWh make it unthinkable for private and public actors to invest in these alternative technologies and thus even counteract the federal government’s own transformation fantasies.

The Energy Efficiency Act is a bureaucratic monster and will further inflate the green certification economy. Even the explanatory text of the draft law, which famously downplays the costs, puts the compliance burden on business at 7.3 billion euros by 2030 due to the forced introduction of energy or environmental management systems, the preparation of energy-saving plans, mass certification, the compulsion to use waste heat and the extensive information and reporting obligations. In the event of non-compliance with the Energy Efficiency Act, companies face fines of up to 100,000 euros. The administrative costs for the public sector are estimated at almost 4.5 billion euros by 2030. Although the draft law does not formally impose any obligations on municipalities, it is obvious that it is precisely these that will have to shoulder the main burden of implementation measures in the public sector.


In summary, the coalition of SPD, Greens and FDP wants to implement the socialist Morgenthau Plan in the 21st century with the Energy Efficiency Act, even not necessarily intentionally, but factually: the complete deindustrialisation of Germany into a planned agrarian state.


  1. BMWK (2023).  Entwurf eines Gesetzes zur Steigerung der Energieeffizienz und zur Änderung des Energiedienstleistungsgesetzes. URL:
  2. Fuest C. (2023). Das Energieeffizienzgesetz bedroht das Wirtschaftswachstum. ifo Institut, Handelsblatt. URL:
  3. Pfeifer E. (2023). Wohlstandsverluste durch das geplante Energieeffizienzgesetz? DIHK. URL:–93004
  4. Kemmler A. et al. (2021). Entwicklung des Bruttostromverbrauchs bis 2030. Prognos AG, BMWi. URL:
  5. Mueller A.P. (2022). Wie Deutschland deindustrialisiert werden sollte. Der Morgenthau-Plan und an was er heute erinnert. Mises Institut. URL:

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