Germany is in the midst of an energy transition that, according to many experts, is degenerating into an expensive planned economy. EON CEO Leonhard Birnbaum speaks openly of a misguided development that jeopardizes Germany’s industrial base. He argues that current climate policy is not based on market principles but rather on centralized state control. The consequences, he says, are billions in debt, ever-increasing subsidies for electricity, and a growing backlog of reforms that is paralyzing the country. (shows.acast: 07.11.25)
Planned economies block market-based solutions
Birnbaum emphasizes that the expansion of wind and solar power plants without regard for grid capacity is a fundamental problem. “We’re building renewables that I don’t need into a grid that can’t handle them,” he explains.
This misplanning is a symptom of a policy that prioritizes control over market mechanisms. As a result, money flows into superfluous projects, while consumers end up paying twice – for infrastructure and for compensation. In his view, the planned economy in the energy sector has become an inefficient system that stifles innovation and causes costs to skyrocket.
Energy Transition Between Idealism and Reality
For Birnbaum, the German energy transition serves as an example of political overreach. “We defined goals and then created sub-goals. Reality doesn’t align with our plans.” Such structures remind him of earlier times of centralized state control. The EON CEO calls for an honest assessment: Instead of even more subsidized electricity, the country needs a course correction in its energy policy. Climate policy, too, must be more economically oriented; otherwise, Germany will lose its industrial core.
Industrial Electricity Prices Mask Structural Problems
Birnbaum describes the idea of subsidized electricity prices for energy-intensive industries as a dangerous, superficial solution. The so-called industrial electricity price may alleviate the pressure in the short term, but it exacerbates the problems in the long run. “It’s an incredibly expensive instrument that merely masks structural weaknesses,” he explains. Every new subsidy increases the budget deficit and prevents sustainable reforms. The flow of subsidies doesn’t ensure competitiveness, but rather prolongs stagnation.
Reform gridlock despite clear savings potential
Despite massive criticism, Birnbaum sees Economics Minister Katherina Reiche as a rare voice of reason. However, her proposal to save €15 billion annually is meeting with resistance. “We could save €15 billion per year if we implemented everything as planned,” he emphasizes. But other ministries are blocking reforms to preserve outdated structures. According to Birnbaum, the growing reform gridlock jeopardizes the future viability of the economy and intensifies the financial burden.
Billions in debt without structural reforms
With regard to the €500 billion special fund, Birnbaum speaks of a missed opportunity. Despite this enormous sum, there have been no real changes. “We’ve already spent the 500 billion euros twice over, and there are zero structural reforms in sight,” he criticizes. If this course continues, politics is heading into a phase of permanent central planning, where debt is generated instead of solutions. The billions in debt not only burden the budget but also erode public trust.
Germany needs market-based renewal, not a planned economy
Birnbaum sees Germany’s energy transition at a crossroads. Politicians must finally decide between a planned economy and a market economy. Only through clear reforms, addressing the backlog of reforms, and moving away from subsidies can the country get back on a sustainable path. Otherwise, it risks a future of debt, stagnation, and political self-deception.