German researchers propose “nothing less than relaunch of climate policy”

German magazine Der Spiegel has run a cover story on the climate crisis and the proposal by German economic and climate research think tanks MCC, PIK and RWI for a sweeping change of Germany’s energy taxes and levies. The researchers “plan nothing less than a relaunch of environment policy, which lately produced more and more meagre results,” the article says. They say that introducing a price on CO₂ is the most cost-efficient instrument for Germany to reduce emissions and reach its own climate targets. The think tanks argue that carbon emissions should be given a floor price of at least 20 euros per tonne by 2020 and it should increase to 35 euros by 2035. They argue that if a European floor price is politically unfeasible, a coalition of willing EU countries could introduce “flexible national CO2 taxes that balance the difference between the price on the European allowances market and the floor price agreed on by the willing countries”. Heating and transport, important sectors not included in the European Emissions Trading System (ETS), should also be included in the carbon pricing reform, the researchers say. To balance the costs for consumers, Germany should at the same significantly reduce its electricity tax, they add.
Once a role model in climate action, the tenaciously high emissions level and an even increasing output of transport emissions have made Germany an international laggard in putting the economy on a more sustainable path. While quite a few industrial companies as well as many politicians from several parties support the concept of CO₂ pricing – including environment minister Svenja Schulze – a majority in Germany’s government parties is afraid that a price increase for fuel and heating oil could trigger a similar reaction like in France, where protests against higher fuel prices by the so-called ‘yellow vests’ (gilets jaunes) shook the country in recent weeks. According to the article in Der Spiegel, energy-intensive industries could be shielded from damaging effects through exemptions and less affluent households receive annual refunds to cushion their financial burden of a CO2 price, which is estimated to lead to additional fuel costs of 15 euro per month by 2030 for “frequent drivers.”

Read the article in German here (paywall) and find the press release and the research paper in German here.

Read the CLEW article Fear of public backlash and complexity hold back German CO2 price for background.