Economists and researchers criticise “rigid corset” of German climate targets ahead of coalition talks

Several German economists and researchers have criticised the annual greenhouse gas emissions reduction targets laid down in the Climate Action Law, arguing that they could lead to inefficient policy. The "rigid corset" of the law makes climate action “particularly expensive and inefficient,” German Council of Economic Experts member Veronika Grimm told Handelsblatt. At a press briefing presenting a report on how Germany could reach climate neutrality by 2045, researcher Gunnar Luderer of the Potsdam Institute for Climate Impact Research (PIK) said the calculated scenarios showed that a stipulated annual emissions reduction targets for individual economic sectors was indeed not cost-efficient. “We need more flexibility. There is some, but it can’t be used fast enough.” He said it would make sense for the power sector to contribute more at the start, while other sectors would need more time for larger emissions reduction.

The issue could come up in the ongoing coalition talks between election winner Social Democrats (SPD), the Green Party and the pro-business FDP. While the SPD was the key driver of the Climate Action Law’s make-up in the outgoing government and the Greens support it in general, the FDP has often called for a CO2 price across all sectors as a key instrument instead of rigid sector targets.

Last week, German Energy Agency (dena) head Andreas Kuhlmannsaid that Germany would miss its greenhouse gas reduction targets in most, if not all, sectors this year "with probability bordering on certainty" – and likely also next year. In case of a target miss, the country’s Climate Action Law stipulates that the government must introduce emergency programmes to readjust efforts. However, this stands in the way of target-oriented efficient action and thus prevents the creation of the necessary momentum, said Kuhlmann.