Socially-just climate policy should be next German govt's focus – foundation

The next German government must restructure climate policy to make sure the whole population can participate in the transition, the Climate Neutrality Foundation concluded in a paper with policy priorities for the upcoming legislative period. "Many parts of the established mix of climate policy instruments must now be radically overhauled," Climate Neutrality Foundation co-director Rainer Baake said. "Climate neutrality, especially in the building and transport sector, can only be achieved if there are solutions for all parts of society."

Particularly, the expected rise in CO2 prices from 2027 onwards is likely to put people who are still driving with combustion engines and heating their homes with oil and gas under immense pressure. Acceptance for climate action and the energy transition, which the vast majority of the people in Germany currently support, could drop if the lowest half of earners could not participate in the transition, Baake warned.

Until now a large share of financial support for climate action – such as premiums for electric vehicles – has gone to higher earners. Therefore, the foundation called for the implementation of a social 'climate bonus' scaled according to income, so that financial support reaches the people who need relief most in the face of rising prices. "Concern about financial strain has grown in recent years," Baake said. "Rising CO2 prices as part of emissions trading will accelerate this process if there is no change in the way households are supported and infrastructure is financed."

Germany is now in the age of implementation of the transition, the foundation's co-director Thomas Losse-Müller said. Climate policy targets would only be met through increased investments. Therefore, the next German government would need to reform Germany's debt brake and cut fossil fuel subsidies he added. It should also focus on reducing electricity prices for industry and households and foment green lead markets.

Germany aims to reduce greenhouse gas emissions by 65 percnet by 2030. Therefore, the next legislative period – which lasts until 2029 – will largely determine whether the country achieves its climate target for the end of the decade.