Preface

For twelve years now, the GreenTech Atlas has been putting environmental technology and resource efficiency in the spotlight. It brings together the latest information on technologies, market sizes and expected growth rates in the industry’s various lead markets.

Environmental technology and the companies that operate in this space are of huge importance to Germany, contributing 15 percent to the country’s gross domestic product in 2020 – a figure that is still on the rise, along with associated employment and revenue growth. In times of crisis, the green tech industry stabilizes economic development with its robust and sustainable business models. The Covid-19 pandemic, for example, has hit this industry much less hard than the economy as a whole.
The green transformation is increasingly sweeping through areas of key social, economic and political relevance. Global challenges such as mitigating climate change and conserving resources demand complex solutions across different sectors. That is one reason why “green tech made in Germany” is so much in demand on the markets of the world: German companies deliver integrated solutions that are built around innovative products and services. If Germany is to continue writing this success story,
both its corporate community and the political echelons must ensure that the country’s environmental technology and resource efficiency industry maintains an ever sharper competitive edge. The GreenTech Atlas 2021 spells out both the vast growth potential
afforded by green markets and the stand-out role that Germany plays in these markets. It documents the industry’s impressive capabilities and will help German companies make the most of global market and export opportunities.

Executive Summary

In the political context, the Green Deal proposed by the EU Commission – in conjunction with the multiannual financial framework already resolved by the
European Union (EU) for the period from 2021-2027 and the stimulus package – will be of pivotal importance. Once finalized by the European Union, the scope and implications of this unprecedented bundle of measures and investments will usher in an era of ecological modernization, help low-carbon technologies make the breakthrough and, by 2050, establish Europe as the first climate-neutral continent.

On the social level, demand for new and sustainable ways of living and working has been on the rise for years. This is reflected not only in the success of the worldwide “Fridays for Future” movement: It can also be seen in more widespread use of new mobility concepts, which are booming in urban settings in particular. Digitalization, too, is accelerating this trend by opening up new business models and platform
solutions.

Around the globe, there is a unique opportunity for climate change mitigation projects to be instrumental in rebuilding national economies after the Covid-19 pandemic. In the wake of the massive economic implosion at the start of last year, numerous development programs – first and foremost the EU’s stimulus package – are fostering hope of fresh impetus from selective investment in forward-looking technologies. This could shore up European providers’ ability to compete and either protect or create suitably qualified jobs. At a time when many other industries are struggling with the consequences of disruption, crumbling demand and changing consumer habits, the
green tech industry faces sound growth prospects from which German companies in particular can benefit handsomely.

Forecasts of global and national market growth have received clear confirmation and continue to underpin a positive outlook.

The global market volume for environmental technology and resource efficiency exceeded the 4 trillion euro mark for the first time in 2020. As current figures show, projected growth rates on both global and na
tional green tech markets have consistently been surpassed. While the 2016 edition of the GreenTech Atlas predicted a market volume of 4,200 billion euros in 2020, the actual figure now stands at 4,628 billion euros. This new record continues the growth trajectory this cross-sector industry has experienced in recent years.

Going forward, the outlook remains bright, with the green tech industry on course for further expansion. Market forecasts across the seven lead markets put the industry’s global market volume at 9.38 trillion euros in 2030, mirroring average annual growth of 7.3 percent. Green tech’s long-standing growth curve thus continues unabated, even as the key market drivers themselves are gathering new strength. In Germany, the industry is even outpacing the dynamism of the global market. In 2020, Germany’s
environmental technology and resource efficiency sector recorded a market volume of 392 billion euros. This figure will more than double to 856 billion euros
by 2030, which works out at average annual growth of 8.1 percent. Energy efficiency remains the biggest lead market (117 billion euros), followed in second place by
sustainable mobility (91 billion euros).

Buoyant technological development across the global lead markets.

The energy transition is driving the lead market for environmentally friendly power generation, storage and distribution. Alongside renewable energies in the
form of solar and wind power, storage technologies centered around batteries and hydrogen will further fuel the market in the future. Here, projected average
annual growth of 8.5 percent through 2030 is above the average for the green tech industry as a whole. Additionally, extensive investment is needed to fund
growing convergence in the generation, distribution and consumption of power and heat.

In the lead market for sustainable mobility, demand is shifting away from efficiency technologies and toward e-mobility. By far the fastest growth is taking place in alternative drive technologies. Between 2020 and 2030, annual average growth of 13.3 percent should boost this market segment to a global market volume of 623 billion euros (up from 34 billion euros in 2016). Sustainable water management is constantly gaining in importance. Population growth, rising water consumption and increasing pollution are the causes of persistent strong demand and should see the global
market volume top a trillion euros by 2030. Surging upward at an average rate of over 21 percent per year through 2030, efficiency gains in water usage is the segment with the greatest potential.

Constant growth highlights the value and economic importance of the green tech industry for Germany.

Between now and 2025, the companies surveyed anticipate annual average revenue growth of 9.9 percent. Providers in the lead markets for sustainable mobility and energy efficiency expect to experience the strongest growth, with average annual growth of 12.9 percent projected in both markets through 2025. The number of employees will likewise continue to increase in the coming years, with companies in Germany expecting the workforce to expand by 6.8 percent per year on average through 2025. Firms focused on the lead market for energy efficiency predict the strongest growth (8.7 percent). The German green tech industry is highly resilient.
An online survey of around 400 companies conducted in spring 2020 shows that the industry has so far coped comparatively well with the crisis triggered by the Covid-19 pandemic. Nearly half of the respondent providers rate their current business situation as “satisfactory”, while 37 percent actually deem it to be “good”. Looking ahead, they expect negative fallout from the coronavirus to be much less pronounced in the green
tech industry than for the macroeconomy. Whereas just under 40 percent of companies in the wider economy are bracing themselves for huge challenges in the wake of the pandemic, the comparable figure in environmental technology and resource efficiency is only 17 percent.

The green tech industry supplies systemic and crosssector solutions. The major social challenges of our day, such as mitigating climate change and conserving resources, can be mastered only by adopting a holistic perspective of ecosystems. Green tech’s combination of cross-sector products and services is one of its success factors – a clear strength of Germany’s environmental technology and resource efficiency industry. Sustainable business models and groundbreaking innovations indeed give Germany a global leading position in this sector.

“Green tech made in Germany” is much in demand, but international competition is growing fiercer.

German providers are successfully defending their position on the global market. Environmental technology and resource efficiency products, processes and services made in Germany command worldwide respect and underpin the German industry’s impressive export performance. While this country accounts for only around 3 percent of global economic output, its environmental technology and resource efficiency companies hold a 14 percent share of their market worldwide. Europe remains the foremost target market for German green tech providers, although Brazil, Mexico, Canada, Japan and South Korea are also gaining in importance, alongside Russia and China.

International competition is heating up noticeably. An innovative green tech industry has sprung up in the United States of America and China in particular. These countries are penetrating the lead markets for waste management and recycling and for sustainable water management, for example, with products and services of their own. Global transformation processes, such as those in the energy sector and automotive engineering, are ramping up demand for new technologies. In the future, this will require a sharper focus on innovation and efficiency across the entire value chain: from customer acquisition through financing to operation and maintenance.

For German providers, the biggest challenge in the years ahead will be to defend their impressive position. To shore up their market success both at home and abroad in the future, German companies in the environmental technology and resource efficiency space need innovative products and, above all, a competitive cost structure. In product development, they must relentlessly optimize development costs and product designs as well as production and material costs. At the same time, process costs must be cut in purchasing, logistics, sales and the energy supply. It follows that digitalization, process efficiency and a rigorous focus on value are the most pressing challenges facing the industry if it is to stay competitive in the long term.

Green technologies are playing a key part in various environmental policies

Green technology brings economy and ecology together. The new transportation paradigm is a good example: Green mobility creates opportunities to substantially reduce greenhouse gas emissions that are harmful to the climate. But it also illustrates how the green tech industry is successfully positioning itself in the vanguard of tomorrow’s mobility system, which is also an attractive growth market. Germany has a
worldwide reputation as a driver of innovation and ranks among the most innovative countries, according to the Global Innovation Index 2020.1 German providers benefit from the fact that – from planning through implementation – the integrated, cross-sector and systemic solutions that are needed in the mobility sector number among their recognized strengths. The mobility of the future is being crafted today by companies in the lead market for sustainable mobility. Their activities in e-mobility and the individualization of local public transport, coupled with the digital business models they devise, are making a significant contribution to the ecological transformation of the transport sector. In addition to electrification of the powertrain, hydrogen and fuel cells rank as two more key technologies, especially in areas where battery-powered electrification is not possible (such as in air transport, maritime transport, road haulage and industry). German companies also lead the field in the development, production, reuse and recycling of battery systems.

Digital business models in the mobility space can drive greater sustainability. The constantly accelerating pace of digitalization is enhancing the availability, quality and convenience of mobility offerings – for example by bundling services on a single platform. New smart mobility business models are springing up at the same time. The car-sharing market alone has expanded by over 10 percent per annum in recent years.
In terms of its environmental impact in the mobility sector, digitalization is nevertheless a mixed blessing: It is true that the greater flexibility afforded by free-float
ing car-sharing models could encourage more people to opt against a car of their own, especially when autonomous driving takes off. On the other hand, such models will also compete with more energy-efficient modes of transport such as bicycles and local public transport. Another issue is that autonomous driving requires enormous quantities of data, which will in turn sharply increase power consumption in data centers. Policy decisions must therefore be well thought out if digitalized mobility is to genuinely serve the cause of sustainability.

The green transformation will protect the future viability of our society. Worries about the heavy consumption of resources tied to the way we currently live and work have long since joined concerns about climate change at the top of international policy agendas. Large swathes of the economic community, too, are stepping up to commit
to better environmental protection, advancing a raft of initiatives – ultimately in the interest of protecting their own livelihood. While new technologies often used to be seen as the cause of the problem, they are now perceived as central to its resolution. Green technologies and innovative, resource-conserving business models are thus gaining in importance around the world. There can be no question: The success story and rapid growth of all lead markets for environmental technology and resource efficiency will continue. Why? Because without the support of this green economic
powerhouse, the challenges of mitigating climate change and conserving natural resources simply cannot be mastered.