By Gareth Evans, CEO and Founder
Last week, I had the opportunity to attend Hannover Messe, one of the world’s largest industrial tradeshows, held annually in Germany. This year’s theme was “Energizing a Sustainable Industry.” With more than 26 halls and 4,000 exhibitors, it was a massive hub for learning, connecting, and fully realizing how big of a transformation our economy is undergoing. I went to the show eager to hear perspectives from major players across industries on the challenges and potential surrounding the energy transition.
It was clear from discussions that the commitment to reducing emissions and pursuing sustainability is widespread across European companies and governing bodies. However, there remains a significant gap between ambition and execution. Regulatory frameworks like the EU’s Green Deal have laudable goals but lack clarity on practical implementation pathways that balance economic realities. Cumulatively there could be more money available in the EU through incentives but businesses indicated it is challenging to know how to access it. There is a genuine fear and envy for the U.S.’s Inflation Reduction Act.
A consistent theme at Hannover Messe was the need for greater flexibility and market-driven solutions rather than heavy-handed mandates. I heard from company leaders that there is too much focus on mandating and not enough on creating the right conditions for success. Industry is eager for regulatory stability where there isn’t so much changing in terms of policies and tax regimes. Allowing companies to determine the most commercially viable routes while providing incentives aligned with environmental targets, could accelerate progress.
The role of emerging technologies like green hydrogen garnered much debate. The EU and Germany appear to be bullish on green hydrogen and natural gas as their main solutions, while experts highlighted the economic and infrastructural barriers still to be resolved before mainstream adoption. An integrated strategy coordinating R&D, production, storage and transportation seems lacking. It’s particularly unclear who is responsible for building the necessary midstream infrastructure.
It was refreshing to hear candor at Hannover Messe about the immense complexity of transitioning business models and operations to be sustainable and carbon-neutral. One attendee commented, “Industry is not being sufficiently open about what it will take to invest to achieve decarbonization.” More transparency in sharing challenges could foster valuable knowledge exchange.
Political attendees were celebrating Germany achieving its emission reduction targets. However, the goal was only achieved because major manufacturers shut down operations due to high-priced and unreliable energy. Is this a success? Emission reductions shouldn’t come at the expense of industry, jobs, economic prosperity, and quality of life. We need to improve in all of these areas in tandem and truly identify where the greatest returns on investment can be achieved. There does not appear to be a cost-benefit or tradeoff analysis at a macro and political level.
I was inspired by the emphasis on data-driven intelligence and leveraging digital models to optimize solutions before real-world deployment. Companies need validation before moving forward with any investment at scale – and we need to execute at scale to have the needed impact. This validates VECKTA’s approach of providing actionable data intelligence to help customers simulate scenarios and maximize investment in energy transition systems.
Supply chain security and access was also top of mind at the show. Several of our customers inquired about sourcing solar panels and battery energy storage cells in Europe. But yet, supply is almost nonexistent.
Germany’s energy policies were a hot topic, with the planned 2024 grid fee increases spurring concern over higher commercial electricity costs. This further highlights why business leaders are operating from a place of fear. They are facing strict regulatory mandates and increasing costs of doing business. However, I was struck by the sentiment that Germany’s tendency towards overcaution and insistence on having every variable de-risked plans, could hinder agility.
Mixed Feelings Post Hannover Messe
On a personal level, I came away from my time at Hannover Messe with mixed feelings. While there is growing renewable energy adoption and investment in public transportation and infrastructure – business leaders seem concerned, frustrated, and operating from a place of fear.
The European Single Market has big potential but is bogged down in bureaucracy, strict mandates and regulations. For the market to prevail, there needs to be a clear direction and the right conditions to support free-market growth. We want to see business leaders set up for success and proactively positioning for long-term sustainability and profits. Europe looks to Germany to lead the charge, but it appears to need a clearer energy policy. They are anti-nuclear, phasing out coal and with minimal oil and gas reserves are turning to green hydrogen without a holistic plan.
Leading businesses are embracing onsite energy but needs to be adopted at scale. Emission reductions are being prioritized politically at the expense of all else. I came away quite concerned for the EU’s future of business and the economy based on their energy outlook. If economic growth stalls, there won’t be the necessary funds to navigate the energy transition.
Overall, Hannover Messe highlighted both the obstacles and opportunities surrounding the energy transition. While a shared commitment exists, unlocking accelerated progress will require greater alignment between policymakers and industry realities, coordinated investment in critical infrastructure, and embracing data-driven innovation. The road ahead is daunting but filled with potential for those able to provide pragmatic solutions bridging ambition and economic viability.
