Green sacrifices Upcoming climate bill will be hard on Germany's wallet

After falling short on earlier CO2 targets, Germany now wants to make these goals legally binding. Achieving them won't come cheap.
Quelle: picture alliance / imageBROKER
The drought-stricken Rhine last summer.
(Source: picture alliance / imageBROKER)

After years of setting lofty emissions goals and keeping their fingers crossed that somehow they would be met, the German government is toughening up: It wants to enshrine those targets in law.

A three-line promise, tucked away in the coalition agreement of the current government, foresees cementing its ambitious climate goals into legislation. But this change in approach could turn a feel-good factor into a bitter debate as the necessary measures, particularly for emissions from car fumes and coal-generated power plants, begin to bite.

Germany has long since ceased to be a leader in climate policy. Its self-proclaimed goal by 2020 – reducing greenhouse gas output by 40 percent from 1990 levels – had to be abandoned. Now, a 32 percent improvement is the best it can hope for.

To avoid a repeat of this embarrassment, the government wants to anchor its 2030 goal of a 55 percent reduction in CO2 discharges in law. There's also a financial incentive: If Germany produces more CO2 than EU rules allow, it faces annual costs of €0.6-1.2 billion ($686 million to $1.3 billion) in 2021, running up to €6-11 billion by 2030, according to think tank Agora. These outlays are necessary to buy the additional rights to emit CO2 over the official limits.

Ministries get involved

The CO2 reduction project, a pet issue of the Social Democrats, will test the cohesion of its rickety grand coalition with the Christian Democrats. While most of Berlin’s politicians are avoiding the subject, Environment Minister Svenja Schulze, a Social Democrat, hardly lets a speech go by without mentioning it.

Schulze wants to have a proposal ready by the end of March for other cabinet members to approve. Several ministries are providing input on slashing emissions in their respective sectors. A separate government commission is examining when and how to shut down Germany's last coal-power plants, expected some time between 2035 and 2040. This could costs billions, if not dozens of billions, to compensate the regions for job losses.

Grafik

The Transport Ministry is the most advanced in its plans. The Agriculture Ministry, whose contribution has been marginal for the most part, handed in six measures to reduce nitrogen dioxide emissions and other improvements. The Economics Ministry, which is responsible for energy policy, has been the least enthusiastic in drawing up climate measures.

Transport is particularly important and must cut at least 75 tons in emissions to less than 100 tons annually. How to get there has been the subject of consultations since October, with consumer and environmental organizations in working groups.

Infrastructure improvements and growing use of electric cars, along with EU limits on car emissions, will save 20 million tons in spite of increasing traffic. That leaves a gap of up to 55 million tons that needs to be closed in a relatively short time.

Drivers to pony up

The working groups were supposed to present results by the end of year, but they are still far from finishing up. The violent demonstrations of France's “gilets jaunes” – yellow vests – over a hike in the national gasoline tax were taken as a warning by Germany.

Ultimately, it will be car drivers who bear the brunt of higher costs, because measures to improve streets, add rail transport or reconfigure urban areas for more efficient local traffic will take longer.

More fuel-efficient vehicles will help but are more expensive. Taxes on gasoline, diesel and car registrations will be increased, with fuel taxes going up 52 cents by 2030. That means a liter of gasoline, for example, will jump by a third to around €2 per liter ($7.57 per gallon) from €1.47 currently. A speed limit of 130 kilometers an hour, or about 80 miles per hour, will shrink fuel consumption. (German autobahns still have no speed limit in many sections.)

A series of government measures – including subsidies for the purchase of electric and fuel-efficient vehicles, a surtax on gas-guzzlers, and setting up more charging stations – should reap annual savings of 28.1 million tons in CO2 emissions, according to working group data.

In addition, truck tolls will be sharply increased, which will feed through into higher consumer prices. Reduced consumption by trucks will contribute savings of 18.4 million tons annually by 2030.

Daniel Delhaes covers parliament for Handelsblatt in Berlin. Silke Kersting covers climate policy and Klaus Stratmann covers energy policy. Darrell Delamaide adapted this article into English for Handelsblatt Today. To contact the authors: [email protected], [email protected] and [email protected]