Survey reveals many German economists ignorant of key coal exit details

A survey by the well-known Ifo Institute for Economic Research, conducted in collaboration with leading conservative daily Frankfurter Allgemeine Zeitung, found that 42 percent of the 143 economics professors polled believe that Germany’s coal exit will not lower Europe’s total CO2 emissions. In its press release, Ifo suggested this is because the European emissions trading system (ETS) creates a single, shared carbon budget for participating countries. "If there is no change in the certificates for CO2 emissions in the EU, other countries will probably emit more," the press release states. But Germany’s coal exit proposal explicitly says that emissions allowances equal to the amount saved by coal plants closures should be deleted. When contacted by Clean Energy Wire, Ifo Institute said it was unaware of this key detail. 

In its report on the survey, Frankfurter Allgemeine Zeitung also wrote that "the main argument of the sceptics is that total CO2 emissions in the EU are determined by the upper limit of certificates in the European emissions trading system. If Germany demands less certificates, emissions will simply be transferred to other contries."

But the proposal from Germany’s coal exit commission states that “adequate effectiveness of the national decommissioning of lignite and hard coal plants also has to be ensured within the ETS framework.” The task force recommends the government make use of the option to delete allowances from national auction budgets in 2021. When this was pointed out, the Ifo report's author, Niklas Potrafke, told CLEW he found it "implausible" that the government would follow through. But the environment ministry said the goverment intends to follow the commission's reccomendation.  “Of course we will use this possibility,” a spokesperson told the tageszeitung. 

The coal comission report also says that buying and deleting allowances is already possible in the current trading period, running through the end of 2020. Ifo Institute is one of Germany's most important economic think tanks, and has been a vocal critic of energy transition policies in the past.

The survey has prompted sharp criticism from other media commentators. In a commentary in the left-wing tageszeitung entitled “Strong on opinions, but weak on facts,” Malte Kreutzfeld wrote “more than anything, the survey shows that German economists don’t follow current climate policy developments.” Kreutzfeld also took aim at economists’ predictions that the coal exit will trigger large power price increases, saying that it “also shows a certain distance from reality." A sizeable minority of those surveyed said they expect price increases far in excess of forecasts by the country’s biggest industry lobby association BDI.