How Germany’s climate package can achieve a pioneering climate transition

Four recommendations from the perspective of sustainability research

The federal government has received much justified criticism for its climate package. A differentiated analysis must, however, not limit itself to the ecological dimension; it must also examine the social aspects and the architecture for political governance. In the coming months, it will become clear whether improvements can transform the climate package into an effective climate-policy instrument that leads to a real reduction in emissions of harmful greenhouse gases such as carbon dioxide. Here are four recommendations from the perspective of sustainability research:

A climate transition rather than a change of course

Firstly, the federal government has pulled itself together and introduced a carbon price in the transport and heating sectors. Yet it is taking a big risk with the low initial price and modest rate of increase. If the pricing fails to steer things in the right direction and Germany misses its climate targets, the population will lose faith in the measure’s efficacy. Acceptance for the climate package depends on whether the public consider the measures to be necessary and effective.  

Awareness of the need for climate action has risen sharply over the last few years, and the recent Fridays for Future movement has further heightened awareness. The aim of the climate package therefore has broad public approval. However, many people do not believe in the efficacy of the measures that have now been adopted. This view will escalate dramatically if the climate package does not lead to an appreciable reduction in greenhouse gases in the coming years. In addition, the public will increasingly doubt politicians’ competency and lose trust in their ability to solve problems.

In 2011, the government responded to the nuclear disaster in Fukushima by making a brave U-turn in Germany’s energy policy. Its recent decision to phase out coal has reinforced its credibility in the energy transition. It is now time for the government to execute a pioneering climate transition, instead of merely a careful change of course.

Social balancing mechanisms are important for social peace

Secondly, usage-based pricing of carbon-intensive services and products is fundamentally socially just. This is because it applies the “polluter pays” principle, under which those who consume more must also pay more. Social science studies show that high-income households produce significantly higher carbon emissions than low-income households. It is socially fair for these wealthy households to pay a higher carbon tax.

However, there are exceptions, such as people on low incomes who have been forced into peripheral residential areas as a result of high rents. If they are compelled to drive to work as a result of this, their carbon tax burden should be alleviated through a higher commuter allowance. Ideally, the federal government should base the increased commuter allowance on income rather than on distance (it currently applies from 21 kilometres). Only those on low incomes should receive compensation for unavoidable transport costs. For high earners, transport costs should be considered “reasonable”, as is the case with healthcare costs up to a certain percentage of an individual’s income. This would create an incentive to find low-cost ways of getting around, in most cases leading to people ditching driving in favour of public transport or cycling.

Political responsibility and earmarked distribution of funding

Thirdly, the fact that the individual ministries will be prescribed clear emissions limits must be acknowledged as a major political step forward – one that will cut the existing Gordian knot of dispersed responsibilities in German climate policy. Implementing the accompanying climate-policy measure of carbon pricing must now go hand in hand with renegotiating a mechanism for distributing the income among Germany’s states and municipalities – in particular for the transportation sector, which is currently so detrimental to the climate. Efforts to create a climate-friendly transportation system will only succeed if the federal government distributes a substantial share of the income from carbon pricing to the states and municipalities as earmarked funds. This is because the states lead the way on improving public transport, and the municipalities finance changes to urban infrastructure that will allow more people to actually cycle and use public transport in future. Without a fair distribution key for the funding of necessary infrastructure, the uptake of climate-friendly modes of transportation will falter.

More can be done to achieve a climate-friendly heating supply for private buildings

Fourthly, the federal government’s new Climate Action Programme has rightly recognised that the electricity supply is not the only issue relevant to climate action; along with the transportation sector, the heating supply is also a key factor. The promised ban on oil heating in new buildings is an important and bold step in the right direction. This alone will not be enough however. We need programmes – which are effective and able to cushion social impacts – for boosting efficiency and transitioning to renewable energy sources. Current building renovation rates are lagging far behind requirements and federal targets. A significant increase in programme funds for improving energy efficiency in buildings is urgently needed. To take account of the social dimension, a sliding scale based on income would make good sense. Under this kind of scheme, homeowners with low to middle incomes would receive higher repayment grants. For rental buildings, a sliding scale based on the average rent per square metre of living space could be considered. Owners of buildings charging relatively low average rents would receive more funding. The programmes for renovations carried out by tenants could also be extended. Surveys show that many tenants are willing to invest in energy-saving measures themselves if they can afford it. The appropriate funding could therefore create effective incentives for energy efficiency, especially among those on low incomes.

In conclusion, although the federal government’s Climate Action Programme does not yet contain all the bold steps necessary for a climate transition, the differentiated approach – with its combination of pricing, funding and regulations – is heading in the right direction. No single instrument can bring about the transition on its own. Nevertheless, the federal government would do well to be more courageous: it should stop fussing with trivialities and instead harness the current mood for an ambitious climate action programme to deepen and – where necessary – correct the measures already agreed.

This article was first published on 8 November 2019 (in German) in Tagesspiegel Background Energie & Klima.