Germany 'leading the way' in green growth

Germany is "leading the way" in using green policies to simulate the economy while limiting the amount of carbon, energy and resources needed to achieve growth, demonstrating the role the sector an play in Europe's recovery from the economic crisis – the Organisation for Economic Cooperation and Development has said.

In a report published today, the Paris-based organisation said that "stringent" requirements" had made Germany a leader in environmental goods and services, which were a "important source of economic growth and jobs".

Employment in the sector is estimated at between 180,000 and 1.8 million, while it is thought to have contributed between 1.9 and 5 per cent of gross domestic product in 2009, according to the study. A third of the goods and services produced are exported, including wind turbines, insulation products, and solar panels. The report quotes one prediction that the sector could grow 7.7 per cent each year and be worth €300bn by 2020.

In addition, employment in renewable energy – a sector promoted by the government through feed-in tariffs, which guarantee prices for producers, as well as extensive research and development – tripled to 370,000 by 2010. "Germany's policy on renewables is better designed than in many other countries," said the report, though it called for the costs borne by electricity users as a result of support for the sector to be controlled.

Germany's use of renewables tripled over the decade to 2010, when they accounted for 10 per cent of the energy supply. In 2009, meanwhile, 63 per cent of municipal waste was recycled – ahead of the average of 46 per cent among the 15 pre-2004 European Union member states. And the concentration of chemicals such as phosphorus and nitrates in rivers was reduced as the environmental performance of agriculture improved.

The OECD said Germany had "absolutely decoupled" greenhouse gas emissions from growth during the 2000s, meaning the economy could expand while emissions fell. By 2010 emissions were 24 per cent below 1990 levels, according to the study. Emissions from transport were reduced by 15.8 per cent between 2000 and 2010.

Simon Upton, the OECD's environment director, said: "Massive environmental challenges demand cost-effective solutions that promote innovation and avoid technological lock-in. New sources of green growth can play an important part in the recovery from the current economic and financial crisis. In this, Germany is leading the way."

However, the report warned that "challenges remain" in some areas. Fossil fuels including coal still make up 80 per cent of Germany's energy mix and emissions are expected to increase during the early part of this decade, partly as a result of the phasing-out of nuclear power by 2022. Meanwhile 82 per cent of surface water and 36 per cent of groundwater fail to meet the required EU quality standards of water quality. And the numbers of endangered mammals, birds and plants is high compared to other OECD countries.