Transforming Energy-Intensive Industries in Germany and Canada

The transition towards climate neutrality presents both unprecedented challenges and significant new opportunities for industrial economies. Germany and Canada both have strong manufacturing sectors that hold large economic significance and create strong multiplier effects across their wider economies. They also have ambitious climate targets, which require a deep transformation of these industries over the coming decades.

While both countries have achieved meaningful emissions reductions in their industrial sectors since 1990 – Germany by 44% and Canada by 6.5% – the transition ahead demands more than incremental efficiency gains. The industrial transformation is especially challenging for the energy-intensive and emission-intensive secondary manufacturing industries, which are indispensable for the larger economy in both countries. In Germany, these industries employ around 16% of the total industrial workforce and contribute roughly 3.4% to national GDP. In Canada, the figures are similarly high, with such industries accounting for 15.6% of the industrial workforce and 2.6% of total GDP. 

The most emission‑intensive secondary manufacturing industries in both countries include chemicals and refining, steel and metals, cement and lime, and pulp and paper. Since 2000, in Germany emissions in those sectors fell by 11.4% while in Canada emission reductions in the same sectors amounted to 18.3%. Decarbonising these sectors poses unique challenges. Unlike the power sector – where shifting to renewable energy provides a relatively straightforward pathway to reduce emissions – these industries face more complex barriers due to a challenging combination of intrinsic process emissions, molecular carbon requirements, and high‑temperature, energy‑intensive production methods.

Focusing on these four sectors in Germany and Canada, this comparative study assesses the industrial profiles, sector‑specific economic trends, and progress towards climate targets. It further examines transformation pathways, including cross‑cutting technologies and sectoral pathways, reviews the respective policy frameworks that support industrial transition in both countries, and identifies opportunities for future bilateral collaboration.