Policy Recommendation #1: Increase Carbon Pricing, Especially in the Transportation Sector
Policy Recommendation #2: Mandate That New Heating System Construction Be Carbon Neutral
Germany has reduced nearly 40% of its emissions since 1990 and aims to reach reduction levels of 55% by 2030. When looking at the numbers though you can see that the main reduction is happening in the energy sector, while other sectors (mainly building, industry, and transport) are left behind. We have identified several potential policies which could support a further reduction in those somewhat neglected sectors.
Policy Recommendation # 1 Increase Carbon Pricing, Especially in the Transportation Sector
While almost all sectors have decreased their emissions comparing to the 1990 levels in rates ranging from 20% to 50%, the transportation sector stands at an embarrassing zero reduction. Germany’s new climate strategy for 2030 contains a segment introducing a carbon tax on fuels for transport and heating; this plan is too little and too late. We suggest a more comprehensive taxation scheme which, as suggested by several studies, would reflect the actual cost of CO2 emissions and create a significant incentive to reduce the dependency on fossil fuels for transportation.
Starting in January, the tax imposed is set at a price of 10 Euro per ton of CO2, with an intended increase to 35 Euro per ton in five years. Starting in 2026, the pricing will shift to an auctioning system with a minimum price of 50 Euro per ton. According to several studies by the Mercator institute and the German government, a minimum price of 50 Euro per ton is required in order to make any difference in emissions, and the actual costs of emissions is estimated as high as 180 Euro per ton. The price was set low over a long transitional period in order to soften political resistance as both the automobile industry and private car owners consistently objected to any additional taxation on fuels and road usage; there was even push back against other beneficial measures such as a diesel ban in large cities or a universal speed limit.
Furthermore, in recent years the German government has spent significant sums on transitioning the national railway chain to renewable electricity, reducing taxation on train fares, offering benefits for electric car owners, and is in the first steps of deploying public charging stations for electric vehicles.
We suggest that increasing the carbon tax on petrol, introducing a tax on jet fuel, continuing to make electric cars a viable option, and reducing train fare prices will finally achieve a reduction in the stagnating chart of transport-related emissions within the coming decade. We believe that political courage and swift action can make climate neutral transportation more accessible and reduce emissions significantly. Even a 20% reduction in carbon emissions in other sectors would count for 5% reduction in the general emissions and bring Germany closer to achieving its long-term goals.
Policy Recommendation # 2: Mandate That New Heating System Construction Be Carbon Neutral
A major carbon emissions issue in Germany is the usage of coal- and gas-based heating systems. According to current regulations, the installation of new systems is allowed until 2026 and existing ones should be phased out until 2037. The plan is criticized as conservative or even outdated by several research institutes, noting that neighboring countries have imposed such a ban on new installations already and suggesting Germany had the technological as well as the financial means to do so as well. As of 2020, Germany’s building sector has reduced 42% of its emissions, and the suggested path set a goal of 67% reduction by 2030. Yet, allowing six additional years to install new carbon emitting heating systems would leave an estimation of 2,000 PJ of energy produced by carbon based fuels in this sector by 2030 and the emissions from the building sector would be a bit short of 10% of total emissions. We believe that imposing such a ban without delay, especially in large cities like Berlin with immense new constructions, could result in a more ambitious goal.
These measures could easily be amended into the climate strategy and sustainability strategy, which were approved last year, as a last action of the current government pending elections this October. Even though political lobby groups are expected to pose significant opposition, polls show that a vast majority of the German public support further action involving rapid and aggressive measures to tackle climate change. The topic of climate change is considered a consensus across the political spectrum and we believe that all ministries involved have the interest to show significant action before going to the polls.
Svenja Schulze, Federal Minister of the Environment
Bundesministerium für Umwelt, Naturschutz, und nukleare Sicherheit
Peter Altmaier, Federal Minister for Economy and Energy
Bundesministerium für Wirtschaft und Energie
This Post was submitted by Climate Scorecard Germany Country Manager Zahi Badra