Saturday September 11th 2021
Billions in climate protection
“The green zero is more important than the black”
How much money does Germany have to invest in order to achieve the 2030 climate goals? Authors Tom Krebs from the University of Mannheim and Janek Steitz from Agora Energiewende calculate this in one new study – and discover a huge funding gap.
ntv.de: In your study you find a billions gap in climate investments up to 2030. They estimate the financial requirement at 460 billion euros, but only 80 billion euros were made available by 2025. Can Germany still achieve its climate goals?
Janek Steitz: In order to achieve the goals, the next federal government has to change gear on climate protection and quickly take the measures that are now necessary. This requires an immediate climate protection program right at the beginning of the legislative period and, as part of this, a public and private investment offensive. The results of the study provide an important framework for this, because they show the financial requirements for public climate investments we are talking about. So far there have been no figures on this. With this better understanding of the necessary funding needs, the question of how these public investments can be financed must now be prioritized. The federal government alone will have to provide around 30 billion a year by 2030.
How did it come about that so much money was missing in the first place?
After the ruling by the Federal Constitutional Court, the federal government tightened the climate targets in the summer. Climate neutrality is to be achieved by 2045. By 2030, greenhouse gases are to be reduced by 65 percent compared to 1990. That means that much more has to be done than previously thought. This is also reflected in the public funding requirements, which, as identified in the study, are significantly larger than existing estimates of macroeconomic requirements would suggest. So there is a clear discrepancy between the funds made available so far and the new climate goals.
Hundreds of billions of euros would have to be invested. This naturally begs the question: where should all the money come from?
The study is also intended to provide an impetus to prioritize precisely this question now.
But does it not provide any answers?
Janek Steitz works at Agora Energiewende as a project manager in the area of ​​fundamental issues with a focus on national and European politics.
We did not deal with that in the context of this study. We looked at the expenditure side, but not the potential income. A much discussed option is to finance part of the public investment with the income from national CO2 pricing. However, almost all parties are calling for the income from CO2 pricing to be repaid to citizens via a climate bonus. Another possibility is the introduction of new levies. In the industrial sector, for example, there is discussion of introducing a climate situation on products such as plastic or steel. In addition, the state can take out new loans to finance the urgently needed investments in climate protection. From my point of view, you will not get around that. So there are different ways of financing.
The fight against the corona crisis has led to a surge in national debt. Is there enough money left over for climate protection?
To put the whole thing in perspective: The annual public funding requirement estimated here to achieve the 2030 target is around 1.3 percent of the gross domestic product in 2019. This is feasible and, above all, appropriate to the size of the challenge. Ultimately, the aim is to lead Germany as an industrial location into a competitive, climate-neutral future. With a view to future generations, the following applies: The goal of the green zero, i.e. getting to zero emissions as quickly as possible, is more important than a fiscal policy goal such as the black zero. Because one thing should not be forgotten: The elimination of climate damage can be very expensive for future generations. The reconstruction after the damage caused by the flood disaster in western and southern Germany is now costing the federal and state governments 30 billion euros.
In the study, you examine how much money is missing at the federal, municipal and private investment levels. Where are the most problems at the moment?
We see the greatest need for public funding for private investments with around 200 billion euros by 2030. A major reason is that many of the climate-neutral technologies are still more expensive than fossil alternatives. Rising CO2 prices will provide an additional incentive to switch to climate-friendly technologies in the future. In the meantime, the switch can and must be supported and accelerated through the promotion of private investments – otherwise the climate targets may not be met. But of course the other levels are also important. At the municipal level there is the greatest need for the expansion of public transport, at the federal level the expansion and digitization of rail transport are extremely important.
Assume enough money is invested. Is that enough?
Public investments are a key lever, but they are only one building block for the implementation of climate protection measures. One example is the building sector: Providing even more money now to promote energy-efficient building renovation and the switch to heat pumps is important and also necessary. But it is not enough. The structural prerequisites must also be created: This includes sufficient resources in the building authorities and enough qualified craftsmen to implement the construction measures. It is also important to create effective incentives. The key here is the CO2 price, which must now be increased more quickly than previously planned.
At first glance, the results of the study are rather pessimistic. What is your outlook for the future?
Our study shows that climate protection is a major investment and future program. The next decade until 2030 must be a decade of investment: in climate-neutral energy supply, industrial plants, transport, building renovation and a hydrogen infrastructure. The task now is to transform the capital stock of the German economy towards climate neutrality, to create prosperity and at the same time to emit fewer greenhouse gases. For all of us, this is the chance to live more sustainably and healthily in the future.
Lara Wernig spoke to Janek Steitz
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