Carbon Tax and Fossil Fuel Phase-Out: Is Germany on the Right Path?

At the annual conference of the Verein für Socialpolitik in Leipzig representatives of the Dialogue on the Economics of Climate Change discussed whether Germany is on the right path with its climate policy measures. The panel discussion of the Arbeitsgemeinschaft deutscher wirtschaftswissenschaftlicher Forschungsinstitute* (ARGE) dealt in particular with CO₂ taxes and the coal phase-out.

Moderator Achim Wambach (ZEW) led through the discussion with Karsten Neuhoff (DIW Berlin), Sonja Peterson (IfW Kiel) and Karen Pittel (ifo Institute). He particularly addressed the recently adopted resolutions of the German Federal Governments Climate Cabinet. It became apparent that the catalogue of measures, which is now to be transposed into climate protection legislation, leaves numerous questions open and various problems unsolved. For example, it remains unclear, what effect the proposed price for a ton of CO₂ will have. It also is uncertain if the catalogue of measures takes sufficient account of possible redistribution effects and if it finds an appropriate way of dealing with them.  Regarding environmental policy, the role of individual instruments and the way they are embedded into the overall package of measures was proven to be central: Is it primarily a question of CO₂ pricing and its effect, or how CO₂ pricing can flank the agreed measures? Achim Wambach pointed out that a public dispute about bans of for example domestic flights or SUVs would not be promising: "Such bans only have a political signaling effect", said the president of ZEW.

_{* Community of German Research Institutes of Economics}