Dialogue on the Economics of Climate Change


Background Papers Forum Climate Economics

Fossil Fuel Phase-out and Just Transition

Forum Climate Economics 7 on October 12, 2020

How can the phase-out of fossil energy use be implemented politically for the achievement of ambitious climate protection goals? An analysis of existing policies, processes and proposals aimed at supporting the phase-out of fossil fuels helps to identify effective approaches and how they can be adopted in different regional contexts. A key factor in successfully phasing out fossil fuels is doing so in a socially just manner. Therefore, possible positive and negative distributional impacts of the phase-out on households and consumers on the one hand, and on companies and fossil fuel owners on the other, need to be analyzed.

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Transparent Climate Footprints – Information for Climate-Friendly Action

Forum Climate Economics 8 on February 23, 2021

The implementation of ambitious climate policy is essentially dependent on the provision of a comprehensive information base. Information, this paper argues, is indispensable for successful climate policy in two respects: It is needed if potentials for reducing emissions are to be identified, if the right choice between climate policy instruments is to be made, and if people's behaviors are to be understood. And it plays a central role in empowering citizens and investors to make their own decisions in the interest of climate protection and to get involved through their commitment.

This background paper is only available in German.

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Increasing Global Climate Ambition – How to get Lower-Income Countries and Fossil-Fuel Exporters on Board?

Forum Climate Economics 9 on June 22, 2020

Capital Markets, Institutions, and Distributional Effects – Towards Ambitious Climate Policy for Low- and Middle-Income Countries

Low- and middle-income countries (LMICs) are often not the focus of international climate negotiations. Yet enabling them to transition to zero-carbon energy systems without compromising development goals is essential to preserve the opportunity to meet the global goals of the Paris Agreement. The key to successful climate action in this regard often lies in the creation and improvement of domestic institutions that, for example, better compensate the least well-off, allow capital markets to function smoothly, and promote the formation of public consensus rather than vested interests.

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Chances and Obstacles to Strengthening the Paris Agreement – The Case of Resource-Rich Countries

Analysis of the fundamental challenges resource-rich countries face in decarbonizing their economies reveals a rather skeptical assessment of the current climate ambition levels of many of these countries, as well as expectations for achieving not only the current NDCs but also climate neutrality by 2050. To overcome their resource dependence, these countries need economic perspectives beyond fossil fuel exports. Several policy options are presented that aim to incentivize higher climate ambitions and address both fossil fuel demand and supply.

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Insurance of Climate Risks - Between Private Provision and Public Intervention

Forum Climate Economics 10 on November 22, 2021

Insurance can mitigate the economic consequences of extreme weather events for households and businesses. However, despite the benefits of such insurance, demand by households and businesses, especially in the Global South, is relatively low. Using the two main types of insurance - indemnity insurance and index-based insurance - the potential and limitations of insurance solutions in climate change adaptation are highlighted. It will be illustrated which distributional effects insurance against extreme weather events can have and what a meaningful role of the state can be in both types of insurance.

This background paper is only available in German.

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The Financial Sector as Climate Protector? The Potential of Sustainable Finance

Forum Climate Economics 11 on March 3, 2022

The established goal of climate neutrality requires rapid decarbonization of the economy. Both in Germany and in the European Union, the financial sector is seen as playing an increasingly important role in achieving this goal. This background paper provides an overview of the fields of action, actors and measures associated with the term "sustainable finance". It looks in more detail at the levers that control how investors or capital markets decide whether to invest in low-emission activities or to withdraw from emissions-intensive activities, and at the framework conditions needed to enable different groups of investors to make well-informed decisions.

This background paper is only available in German.

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Voices from the Dialogue

Contributions for discussion

Positions: "Fossil fuel phase-out and just transition"

12/2020 | Download (in German)

How do system transformations succeed in the area of tension between European climate targets and international commitments – especially in times of COVID-19? How can these transformations be implemented in a socially just way? And what potential new path dependencies lurk in the event of a coal phase-out? These questions were discussed at the Forum Climate Economics 7 with representatives from academia, business, politics, associations and government agencies. The conclusions and insights from the discussions are summarized in this position paper.

This position paper is only available in German.

Open letter regarding the Interim Report of the Sustainable Finance Advisory Board

05/2020 | Download (in German)

Researchers of our cross-cutting theme "Financial markets, financial sector and climate finance" discuss the interim report "The Importance of Sustainable Finance for the Major Transformation" of the Sustainable Finance Advisory Council of the German Federal Government. They formulate their feedback in this open letter on the topics 1) prioritisation of measures, 2) suggestions for improvement and concretisation of selected measures and 3) Specification of research needs.

This open letter is only available in German.

CO2 price and climate protection - Discussion in the Dialogue on the Economics of Climate Change

04/2020 | Download (in German)

The discussion on the German government's Climate Protection Program 2030 is one topic currently discussed among climate economists. The proposal for carbon pricing on fossil fuels and its design will play a central role in climate politics over the coming years . Three questions are of particular interest: First, which form of pricing is better - a CO2 tax or emissions trading? Second, how can such a system be designed in a socially acceptable way? And thirdly, what effect does carbon pricing have on the international competitiveness of companies?

This report is only available in German.

Opinions & Open Editorials

Interview: Stigmatizing certain sectors makes no sense

07/2022 | Debate Energy

What motivates people to help combat climate change? What role do the benefits for individuals play and how important are group dynamics in relation to climate measures? Prof. Dr. Martin Kesternich, Professor of Economics and Deputy Head of the Research Unit "Environmental and Climate Economics" at the Leibniz Centre for European Economic Research (ZEW), investigates these questions in this interview with Debate Energy.

Open editorial: "Out of coal, but fast!"

05/2022 | Süddeutsche Zeitung (in German)

If global warming is to be limited to 1.5 degrees, only one thing can help: a coal phase-out. Jan Christoph Minx and Jan Steckel (both MCC Berlin) argue why it must happen now and how it can succeed in a guest article in the Süddeutsche Zeitung, published on April 29, 2022.

A related blog entry in the Common Economics Blog of MCC Berlin can be found here.


Energy Supply in Germany Secured Even Without Natural Gas From Russia

04/2022 | DIW aktuell, Nr. 83 (in German)

The Russian war of aggression on Ukraine and Germany's dependence on energy supplies from Russia require a rethink: While the debate about an immediate energy embargo is boiling up, Russia could also stop its supplies at any time. Until now, Germany has purchased around 55 percent of its natural gas from Russia. DIW Berlin has developed scenarios for how the German energy system could become independent of these imports as quickly as possible in the European context...


Open editorial: "Evidence-based climate protection? Do it like the medicine!"

12/2021 | Der Tagesspiegel (in German)

Climate protection urgently needs better policy advice. The life sciences are a role model, argues Dialogue on the Economics of Climate Change researcher Jan Christoph Minx (Mercator Research Institute on Global Commons and Climate Change, MCC) in this commentary. He sees the scientific approach of "living evidence" as the key to the global challenges of our time.


Open editorial: "The quiet revolution in climate pro­tec­tion"

06/2021 | Der Tagesspiegel (in German)

The quiet revolution in the reform of the German climate protection law is the introduction of targets for the removal of carbon dioxide from the atmosphere, comment two scientists inside the Dialogue on Climate Economics. In doing so, Germany is acknowledging a key finding of climate science, such as that outlined in the IPCC's special report on 1.5 degrees Celsius global warming: Without CO2 removal, we will neither succeed in repaying the credit of excess emissions that we are currently borrowing from the atmosphere due to slow emissions reductions, nor in achieving the goal of "net zero" emissions after 2045. At the same time, the German government remains timid about removal targets: natural sinks, as currently only provided for in the Climate Protection Act, will not be sufficient, emphasize Jan Minx and Arwen Colell (both MCC Berlin).


Position: The global political situation - accelerator or brake in climate protection?

06/2022 | Tagesspiegel Background (in German)

Energy economist Christian von Hirschhausen (TU Berlin) and economic researcher Jens Boysen-Hogrefe (Kiel Institute for the World Economy) take contrasting positions on the impact of the Ukraine war on climate protection in their respective viewpoints in the Tagesspiegel. One sees the political signs in Europe pointing to the increased expansion of renewables and Russia as too isolated to negatively influence other countries in the climate negotiations. The other sees Europe as merely shifting away from Russian gas to fossil fuels from friendly countries...


Power Supply Secure Even Without Russian Energy Supplies and Despite Nuclear Phase-out – Coal Phase-out Remains Feasible in 2030

04/2022 | DIW aktuell, Nr. 84 (in German)

The European Union is increasing the pressure on Russia with a coal embargo. After a transition period, no more Russian coal is to be imported in August. Recent studies show that Germany can replace imports from Russia with imports from other countries by the summer. However, since there is also a threat that Russian natural gas supplies will come to an end, plans must be developed to ensure security of supply. DIW Berlin has analyzed in scenario calculations how the German power system can respond to a halt in Russian energy supplies (especially coal and natural gas) without calling into question the accelerated coal phase-out or the nuclear phase-out in 2022.


Insurance Against Extreme Weather Events: An Overview

10/2021 | Review of Economics

Extreme weather events increasingly threaten the economic situation of households and enterprises around the world. Insurance against extreme weather events is among the climate change adaptation instruments that are currently discussed by the policy community. This overview paper provides a synopsis of the state of research on insurance against extreme weather events, outlining advantages and limitations inherent in three main types of insurance: indemnity-based insurance, index-based insurance, and insurance-linked securities. The paper discusses issues related to insurance uptake, distributional effects, misleading incentives and potentially negative side effects, as well as the role of the state.


Open editorial: "We need a climate check"

06/2020 | Süddeutsche Zeitung (in German)

Four researchers of the Dialogue on the Economics of Climate Change criticize that climate protection is not established as a cross-cutting issue in the federal government's economic stimulus package, which is the basis for all private and public investment support. Gernot Klepper (IfW), Christine Merk (IfW), Karen Pittel (ifo) and Frank Wätzold (BTU Cottbus-Senftenberg) call for a "climate check" for government funding and investment programs announced during the corona crisis. The current economic stimulus program only partially fulfills its function of making the initiated development fit for the future.


Publications from the funding measure Economics of Climate Change

Journal Articles

Here you can find publications in scientific journals of the projects of the funding measure Economics of Climate Change.

Bertram, C., Luderer, G., Creutzig, F., Bauer, N., Ueckerdt, F., Malik, A., Edenhofer, O. (2021):
COVID-19-induced low power demand and market forces starkly reduce CO2 emissions.Nature Climate Change 11: 193–196. 

Brauers, H. (2022):
Natural Gas as a Barrier to Sustainability Transitions? A Systematic Mapping of the Risks and ChallengesEnergy Research & Social Science 89: 102538.

Engler, D., Groh, E. D., Gutsche, G., Ziegler, A. (2021):
Acceptance of climate-oriented policy measures under the COVID-19 crisis: an empirical analysis for Germany.Climate Policy.

Frondel, M., Kükenthal, V.C., Larysch, T., Osberghaus, D. (2021):
Wahrnehmung des Klimawandels in Deutschland: Eine Längsschnittbefragung privater Haushalte. Zeitschrift für Energiewirtschaft 45: 119-131.

Kesternich, M., Löschel, A., Ziegler, A. (2021):
Negotiating Weights for Burden Sharing Rules in International Climate Negotiations: An Empirical Analysis. Environmental Economics and Policy Studies 23(2): 309-331.

Kraehnert, K., Osberghaus, D., Hott, C., Habtemariam, L.T., Wätzold, F., Hecker, L.P., Fluhrer, S. (2021):
Insurance Against Extreme Weather Events: An Overview. Review of Economics 72(2): 71–95. 

Other Publications

Here you can find contributions for discussion and policy advice of the 29 projects of the funding measure Economics of Climate Change.

Frondel, M., Kussel, G., Larysch, T., Osberghaus, D. (2021):
Climate policy in times of the corona pandemic: Empirical evidence from Germany.SFB 823 Discussion Paper Nr. 07/21.

Frondel, M., Osberghaus, D., Sommer, S. (2021):
Corona and the Stability of Personal Traits and Preferences: Evidence from Germany. Ruhr Economic Papers No. 903.

Manstetten, R., Kuhlmann, A., Faber, M., Frick, M. (2021):
Grundlagen sozial-ökologischer Transformationen: Gesellschaftsvertrag, Global Governance und die Bedeutung der Zeit.ZEW Discussion Paper No. 21-034.

Minx, J. C., Colell, A. (2020):
The Plan for a Circular Carbon Economy. The market for captured CO2 products could be worth $1 trillion. berggruen.org [22.01.2020].

Rottner, E., von Graevenitz, K. (2021): 
What Drives Carbon Emissions in German Manufacturing: Scale, Technique or Composition?ZEW Discussion Paper No. 21-027.