Merz Says Fossil Fuel Exit Would Deindustrialize Germany

(MENAFN) German Chancellor Friedrich Merz has cautioned that a complete withdrawal from fossil fuels could severely damage the country’s industrial base, signaling a notable shift away from Germany’s previously firm commitment to aggressive green energy policies.

His remarks come as Europe’s largest economy struggles with the financial strain of reduced energy imports and sharply rising costs. The situation has been exacerbated by escalating tensions in Iran and disruptions in the Strait of Hormuz, which have driven energy prices higher and added fresh pressure on German manufacturers.

For decades, Germany’s industrial strength depended on reliable, low-cost energy—largely supplied by Russian pipeline gas. That foundation unraveled after Berlin cut ties with Moscow’s energy supplies following the 2022 escalation of the Ukraine conflict, forcing a pivot toward more expensive alternatives while accelerating investment in renewables.

Speaking before the Bundestag on Wednesday, Merz warned lawmakers that eliminating oil and gas could cripple critical sectors such as chemicals, stating that “large parts of our industry… would no longer be viable” then.

He emphasized the continued importance of fossil fuels to industrial production, adding, “Oil and gas are an important raw material for our industry,” and urging policymakers to preserve Germany’s capacity “to import and maybe even to produce gas itself.”

Despite this, recent studies suggest domestic energy reserves are no longer a viable fallback, as Germany’s once-productive gas fields have largely been depleted.

The country’s heavy reliance on imported energy—previously with Russia supplying 55% of its natural gas—has left the economy vulnerable to price volatility and supply disruptions. Since shifting away from Russian energy, Germany has experienced a sustained economic downturn.

The chancellor’s warning directly targets the nation’s energy-intensive industrial core, where companies are grappling with soaring fuel costs and uncertain supply. At Ludwigshafen, the site of BASF’s main complex and Germany’s largest industrial gas consumer, rising energy and raw material expenses have already led to higher prices.

Similar challenges are emerging across key industrial regions, including Bavaria’s Chemical Triangle, where firms describe conditions as “dramatic” and are considering scaling back production or relocating operations amid mounting cost pressures and disrupted supply chains.

Merz’s latest stance also highlights a shift from his earlier position this month, when he rejected calls to revive nuclear power despite increasing support from Brussels for new EU investment in the sector.

Only weeks ago, he had criticized Germany’s nuclear phaseout as a “serious strategic mistake” and said his goal was to restore “acceptable market prices in energy production” without ongoing state subsidies.

Germany shut down its final nuclear reactor in 2023, completing a phaseout policy that accelerated in the aftermath of the 2011 Fukushima disaster.

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