Energy transition as an economic driver: study shows potential worth billions
© Hanover region The energy transition is not only important for climate protection, it also creates enormous economic opportunities and locational advantages. This is shown by a value creation study conducted by the consulting firm DIW Econ on behalf of the Hanover region.
According to the study, if the energy transition is implemented at an ambitious pace in the Hanover region alone, this will result in additional investments of around €24.9 billion by 2035. This will generate €9.5 billion in additional gross value added and secure or create 4,100 jobs per year. Municipal finances will also benefit significantly: around €470 million in additional tax revenue is forecast for the next eleven years.
What did the study examine?
The study analyzes the regional economic effects of the energy transition up to 2035. It looked at all planned or expected investments in four areas: electricity, with the construction of PV and wind energy plants, the expansion of power grids and battery storage facilities; transport, with the expansion of public transport and charging infrastructure; buildings and heating, with building renovation, heating replacement and the expansion of district heating supply; and industry, with the decarbonization of the cement industry.
Methodologically, the analysis is based on an input-output calculation. This determines how investments affect gross value added, employment, and municipal tax revenues—directly, for example through orders to companies; indirectly, for example through demand from suppliers; and induced, for example through employee consumption.
The study answers the question: What happens to the regional economy if the energy transition is implemented as quickly as possible? The expansion path is based on the so-called "Climate Plan Scenario" for the Hanover region presented in 2024, which assumes an ambitious but achievable energy transition in order to come as close as possible to the goal of a climate-neutral region by 2035. Since the pace of transformation between 2020 and 2024 was still below the level necessary to achieve the target, the study models a significant increase in the level of ambition from 2025 onwards.
What are the key findings?
From 2025 to 2035, investments of €24.9 billion will be necessary to achieve the climate plan scenario. €14.3 billion of this, or just under 60 percent, will have a direct impact on the region and remain with local companies. The additional gross value added resulting from the investments will amount to €9.5 billion by 2035 alone. This corresponds to about one-third of the annual value added of the regional construction sector or around 1.6 percent of the total annual economic output of the Hanover region.
On average, 4,100 jobs will be secured or created. This makes the energy transition a job engine on a scale equivalent to the national workforce of a corporation such as TUI. Around 55 percent of the employment effects will be in the building sector. One reason for this is that construction work for the renovation measures is mainly carried out locally and is particularly labor-intensive.
The energy transition will increase municipal tax revenues by around €470 million by 2035. This corresponds to an average of around €43 million per year, which will directly benefit cities and municipalities – for example, for schools, infrastructure, or social services.
Innovative strength, location attractiveness, and economic resilience
In addition to the measurable economic indicators, the study shows clear qualitative effects that are crucial for the future development of the region: the energy transition strengthens innovative power, location attractiveness, social and economic resilience, and security of supply.
The expansion of renewable energies is leading to new collaborations between universities, companies, and start-ups. Regional companies are increasingly developing their own solutions for energy technology, storage, digitalization, and sector coupling. At the same time, local energy production reduces dependence on international energy markets and protects against price and supply shocks. Citizen projects also increase participation and thus acceptance. Overall, this has a double positive effect: short-term economic stimulus and long-term structural sustainability.
What do the study results mean for the state and region?
"The study results are grist to our mill: we would be well advised to resolutely continue on our course in the energy transition," said Energy and Climate Protection Minister Christian Meyer. "The energy transition is a huge opportunity and not just a climate protection project. It is an investment in the future viability of our state – economically, technologically, and ultimately also in terms of security policy. A consistent switch to renewable energies is not a cost risk, but a gain in stability and offers enormous value creation potential. It makes Germany more independent, more resilient, and more competitive in the long term. And Lower Saxony is leading the way: we have successfully turbocharged the expansion of renewable energies in particular."
Therefore, the federal government's constant attacks on subsidy programs for building renovation, electromobility, heat pumps, renewable energy expansion targets, green steel, and hydrogen must stop – because they would unsettle not only consumers but also the economy. Meyer: "We finally need reliability and a clear course for achieving climate targets – not a fossil fuel rollback to the past. Slowing down the energy transition would be particularly damaging to Lower Saxony as the No. 1 energy transition state and would set back investment confidence in renewable energies and transformation."
Among other things, the Hanover region is planning an investment program for climate protection measures with a volume of 250 million euros by 2035. Among other things, this is intended to support energy-efficient building renovations, the installation of PV systems, and the climate-neutral transformation of the economy. In addition, a regional energy cooperative is in the starting blocks. From next year, it will enable residents to support the expansion of renewable energies and participate directly in the profits from regional electricity generation.
Where can I find the complete study results?
The full report by DIW Econ GmbH is available at www.hannover.de/klimaschutz .