Germany’s international competitiveness has declined markedly in the past ten years. Compared to 2007, the German share of international trade in environmental protection goods in 2017 dropped by 2.3 percentage points – from 16.8 percent to 13.6 percent. German patent application share worldwide declined even more sharply: from 18.2% in 2002-2006 to 13.5% in 2012-2016. However, Germany still ranks among the three top in patent applications together with Japan and USA. UBA President Dirk Messner said: "German companies have long benefited on green markets from the fact that high environmental standards applied early on. This innovative strength has apparently lost some of its momentum, which is why it is all the more important for policymakers to set standards in environmental protection that go well beyond the European minimum standards. This is how companies can stay on the leading edge of international competition also in the future. Ambitious environmental and climate policy that creates planning certainty for investors is a major key to a high-performance environmental industry."
In the course of the transformation of the energy system, technical innovations have focused more strongly on climate change mitigation and the pace of innovation has increased significantly. As a result, the number of patent applications for mitigation technologies in Germany grew at more than double the rate of patent applications as a whole between 1991 and 2016. Although the pace of innovation in the energy sector is high, developments have been negligible in areas such as noise mitigation, waste disposal or wastewater treatment. Dirk Messner said: "We need a universal concept that not only funds research and development but also creates price incentives to realize market-ready environmental solutions. In addition to CO2 pricing, we also need to design the tax and charging system in a more climate and environmentally friendly way and scale back environmentally harmful subsidies. It is therefore counterproductive for the state to continue granting tax concessions for diesel fuel on the one hand, while providing support for the purchase of electric vehicles on the other."
Another important area where adjustments can be made is in the green startup support. Startups need a good capital base during their growth phase. According to one survey, green startups name raising capital as a challenge more frequently than non-green startups (39% vs. 29%, source: GreenStartup Monitor 2018). The German Environment Agency therefore proposes the establishment of a state fund for green startups to support the development of radical and disruptive technologies and business models in their development and growth phases and to make it easier for private investors to invest in these startups.
There is also a need for funding when it comes to the rapidly growing markets for environmental technologies in emerging and developing countries and the local potential for sustainable infrastructures. Companies need to develop and supply suitable technological solutions and demand-based products and services in the drive to generate green solutions for the future. The Federal Ministry for the Environment is provides funding for small and medium-sized enterprises (SMEs) through the Environmental Technologies Export Initiative and has recently announced a new call for proposals.
More about the study
The German Environment Agency (UBA) updates and publishes information on the development and competitiveness of the environmental industry every two years. The statistics are based on current research done on behalf of UBA by the Center for Economic Policy Studies (CWS) of the Leibniz Universität Hannover and the Fraunhofer Institute for Systems and Innovation Research (ISI).
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