Securing prosperity and sustainably

Structural change is certainly a promise in Schleswig-Holstein, as one can expect that energy-intensive industries will increasingly locate there. But how can this be achieved efficiently and without provoking local conflicts?
The authors from the Friedrich Schiller University Jena and the Cologne Institute for Economic Research look deep into this asking the following key questions in our current study:

• What regulatory framework allows an effective and efficient transformation? Are purely regulatory instruments sufficient or is state intervention in economic processes necessary in one way or another?
• What are the advantages and disadvantages of industrial locations with a high potential for renewable energy? How can the advantages be expanded and the disadvantages mitigated?
• What about the acceptance of industrial settlements and what factors contribute to the success of such settlements? What can politicians do to make it more likely that they will be successful and to balance out conflicts of interest between the local population, potential investors and the labourers that moved to the new locations? 

All the developed proposals have in common that far-reaching state intervention seems necessary for the transformation to succeed. But these should explicitly be measures that lead to a clear regulatory framework that functions according to market principles. It is not about the state deciding where which industries should be located. With this in mind, the authors propose, for example, regional electricity price zones or regulatory special economic zones – but no subsidies.

The authors discuss experiences of recent years with regard to local feasibility of industrial settlements. Tesla in Brandenburg is an example of a less successful project; BMW's new factory in Straßkirchen/ Bavaria faced far less resistance for various reasons. It becomes clear that it is important to involve local citizens in the planning and realisation process and not just to simulate this through PR measures. After all, there will always be objections to massive changes to one's own homeland, even if they are associated with major economic benefits. Such objections are not short-term sensitivities, but key factors in the success or failure of major industrial projects. In the final chapter, these experiences are applied to the project of the battery manufacturer Northvolt in Heide in Schleswig-Holstein and are translated to concrete policy recommendations.

In summary, the study shows that structural change towards climate-neutral industries is definitely possible in Germany. However, this requires two things: a return to a clear regulatory framework and a serious, open-ended involvement of the citizens affected locally.

Read the entire publication: “Wohlstand nachhaltig sichern – Erfolgreicher Strukturwandel durch klimaneutrale Industrialisierung” here as a PDF. Please note, to date the analysis is only available in German.