Reliable climate policy needed to bolster German economy – government advisors

A proactive economic policy that embraces the challenges of climate change and the energy transition and provides reliable climate policy will improve the economy's resilience, the German Council of Economic Experts (Wirtschaftsweise) says in its annual report on economic development. "Economic policy and industrial policy do not have to be rethought from scratch but should rather be developed further," the council says. The economists say companies and other investors benefit from stable conditions to plan ahead and recommend close international coordination regarding research on climate-friendly technology and on policies aimed at curbing greenhouse gas emissions, for example for carbon-capturing to remove CO2 from the atmosphere. The council say the planned carbon pricing scheme in Germany should be made "the focal point of climate policy" that could make many other regulatory measures obsolete if it is "implemented rigorously" and accompanied by a "systematic redistribution" of additional state earnings. The experts call on the government to integrate the pricing scheme into the European emissions trading (ETS) no later than 2030 and to advocate for a globally uniform price on carbon emissions.

After a decade-long streak of stable growth, Germany's economy has cooled down amid internationally worsening conditions for free trading. Climate-friendly technology is seen as a major growth market of the future and the government as well as industry leaders have repeatedly called for seizing opportunities that climate action offers. However, researchers have warned that climate targets must be made more specific to optimise the transition's cost-benefit ratio.