Beyond Industry: Sufficiency, Structural Transformation, and Value Creation in Germany

On the path toward greater sufficiency, stakeholders face significant challenges in implementing measures to conserve resources and reduce CO₂ emissions. In Germany, one narrative hindering this transition is the belief that industrial sectors, such as iron, steel, aluminium, and cement, are indispensable for economic growth. While industry is framed as inherently productive, other sectors like the arts and services are often dismissed as unproductive or parasitic.

Input-output analyses suggest that downturns in energy-intensive industries could trigger cascading economic effects, potentially threatening national prosperity. This reinforces a perceived interdependence between economic stability and industrial protection. Historical cases, such as eastern Germany between 1989 and 1991, show that unmanaged deindustrialization can lead to social disruption and create groups of "losers". However, such transitions can be mitigated through policies, including retraining programs, recognition of existing skills, and early retirement schemes. Despite this, Germany lacks a comprehensive industrial transition framework grounded in sufficiency principles.

Importantly, the structure of the German economy has already shifted. In 2025, more than 70% of GDP originates from the service sector, including education and healthcare. Recent research further shows that the industrial share is not a consistent driver of long-term economic growth. At the same time, German industry accounts for roughly 25% of national emissions (Scope 1 and 2). Without rapid reductions in emissions from energy-intensive sectors, risks such as climate-related damage, supply chain disruptions, and GDP losses will intensify within this decade.

Using the German steel industry as an example, policymakers must therefore consider how to avoid demand in order to remain within planetary boundaries. One key approach is decreasing reliance on car production by strengthening public transport systems. Expanding public transport is more resource-efficient and socially equitable, avoiding demand for energy, materials, and urban space while improving accessibility and well-being.

However, policymakers have ignored several effective measures to improve Germany's railway system:

1. Customer prices can be reduced by reforming track access charges. Instead of requiring users to cover full costs, a marginal cost pricing model, already applied in other EU countries, would charge only the direct costs of train operations.
2. Simplifying financial flows and pooling funds would enhance the management efficiency of the German railway company DB AG. Funding should be clearly divided into two streams: user-based revenues (e.g., track access charges) and, more importantly, government subsidies, which could be financed through higher property taxes combined with robust tenant protections. This restructuring would significantly lower transaction costs.
3. Permanently waving interest on InfraGO's equity capital and eliminating DB AG's profit-driven orientation can further reduce price pressures. The current fixed interest rate of 1.9% limits operational flexibility and may not be compatible with European law in the long term. Such reforms would support a more affordable, reliable, and sustainable rail system, contributing to a broader sufficiency-oriented transition.