German environment ministry study says local authorities key to green recovery

Enabling green investments by local authorities faced with a steep drop in tax income due to the pandemic must be central to a green recovery programme in Germany, according a study commissioned by the country's environment ministry (BMU). "Decisive investments in climate protection take place in the municipalities, from public transport and new cycle paths to the renovation of municipal buildings," environment minister Svenja Schulze said at the presentation of the study. "The way out of the crisis will depend on whether municipalities can continue to invest. I therefore advocate not only a rescue fund for municipalities, but also an investment programme for municipal climate protection."

"Germany has been experiencing a considerable investment backlog for years - including in the particularly climate-relevant sectors of transport, heating, energy and industry," argues the study conducted by the Macroeconomic Policy Institute (IMK), the German Institute for Economic Research (DIW), NGO Green Budget Germany (FÖS), and the Institute for Socio-Economics at Duisburg-Essen University. The paper calls for a massive increase in climate-friendly investments, particularly in rail infrastructure and public transport, measures to accelerate transport electrification, incentives to boost energy-saving building modernisations and the conversion of fossil heating systems to renewable energy sources.

The authors also argue that Germany should increase its current target of covering 65 percent of electricity use with renewables by 2030 to 75 percent by topping up its yearly targets for the roll-out of wind and solar energy sources. "An increase in the expansion targets is of great importance, also with reference to sector coupling and the increasing demand for electricity in the transport and building sectors," the study says. It also advocates gradually raising the price of emissions to at least 100 euros per tonne of CO2 by 2030. The measures proposed by the study total around 100 billion euros in 2020 and 2021, but they include many expenses not directly related to sustainability, such as a top-up of financial support for families with children.

Governments around the world are drawing up emergency plans to cushion the economic effects of the coronavirus crisis. Climate researchers, politicians and companies have stressed the importance of aligning recovery programmes with emission reduction targets. Schulze is the first German minister to table a concrete concept for a green economic stimulus programme. Last week, French President Emmanuel Macron and German Chancellor Angela Merkel said that a green recovery will be a key principle in their countries' bid to address the economic damage done by the coronavirus pandemic. They said the European Green Deal was a framework for a sustainable stimulus package and proposed a 500 billion euro corona recovery fund to strengthen investments in digitalisation and sustainability.