IfW in the News

German government gets mediocre mid-term marks for climate effort


Sonja Peterson assesses the German government's climate package.

Excerpt from the Article

(...) Kiel Institute for the World Economy (IfW) - Sonja Peterson, scientific director

1. On a scale of 1-10, how would you rate the government coalition’s climate and energy policy work during the first half of the legislative period?


2. What is especially positive and what are the government’s shortcomings?

The most important measure to achieve cost-efficient and effective emission abatement and to incentivise necessary infrastructure investments, structural change and innovation is carbon pricing. Thus, the Kiel Institute regards the extension of carbon pricing beyond the European Emissions Trading Scheme (EU ETS) as the German government’s most important measure. Furthermore, the chosen architecture with an ETS in the heat and transport sectors and the German – French initiative to couple such national ETS, to later vertically integrate them into the EU ETS and to introduce minimum prices are exactly what we proposed as steps towards a uniform and all-encompassing EU carbon price. We also proposed Border Carbon Adjustment to avoid negative competitiveness effects for industry, which is now being considered.

On the negative side, the starting price for carbon is too low and real emissions trading starts too late. Also, the government is not taking carbon pricing as the lead instrument but plans to implement a number of overlapping, partly counterproductive and often expensive command-and-control measures. Finally, the rights of the expert commission are too limited so that it cannot follow the good example of the UK Committee on Climate Change that has strongly contributed to the UK’s successful emission abatement.

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