ifo Institute Criticizes Germany’s New Climate Protection Law
The ifo Institute has criticized Germany’s new climate protection law. “Unfortunately, in its current form the draft law represents a missed opportunity for a more comprehensive reform of climate legislation,” writes Karen Pittel, Director of the ifo Center for Energy, Climate, and Resources, in an article for ifo Schnelldienst. Conceiving decisions over too short a time frame really pushes up the cost of achieving long-term climate targets. Annual emissions targets could have a negative impact on corporate innovation. Eliminating targets for economic sectors, meanwhile, could reduce the cost of achieving climate goals across the economy.
Not linking targets to years would require less follow-up action and leave more room for dynamic technology developments. It is not always clear in advance which technical solutions will prevail when, if at all. Ensuring there is flexibility for the economic sectors could open up the necessary scope in this regard. Hydrogen and synthetic fuels, for example, will foreseeably play a major role in energy-intensive industry, for instance in steel production, and in transportation, including trucking and air travel. However, there is no way to accurately predict to the nearest year how quickly “green” hydrogen will become competitive and be available in large quantities.
Various studies today estimate the costs for 2050 at between EUR 960 billion and EUR 3,354 billion. Given the sums involved, is also particularly important from a distributional perspective to implement the climate protection law as cost-effectively as possible. This would potentially ease the burden on current and future generations.
Publication
How Fair Is the Energy Transition? Distributional Effects in German Energy and Climate Policy
ifo Institut, München, 2021
ifo Schnelldienst, 2021, 74, Nr. 06, 03-33
