Abstract After the beginning of the war in Ukraine, energy prices in Germany increased drastically. The paper analyses responses of German firms to this energy price shock. A variety of measures and reactions at the firm-level are explored, such as substituting machinery and equipment by less energy consuming alternatives, a change of energy suppliers, the use of digital technologies to reduce energy consumption, the introduction of energy management systems, relocation or closure of energy-intensive activities, or replacing fossil by other energy sources. The analysis is based on data from the German part of the Community Innovation Survey. The econometric results show that a high affectedness by the energy price shock in 2022 triggers the substitution of machinery and equipment by more energy efficient alternatives. This measure in turn is correlated to a decrease of electricity consumption and oil use, and it promotes the substitution of fossil energy sources by renewables. From a policy perspective, energy price shocks and politically induced higher energy prices can be advantageous for a shift of energy use towards higher levels of energy efficiency and a substitution of fossil energies by renewables. However, such shocks can lead to negative short-term economic consequences in energy-intensive firms.
Horbach et al. (Fri,) studied this question.