We all know that Germany’s Climate Package is a disaster. Climate Analytics was so kind as to give us a deep insight into its shortcomings.
By Robert Brecha, Bill Hare, Carl–Friedrich Schleussner, Andrzej Ancygier
On 20 September, the same day that more than 1.4 million German citizens took to the streets, joining millions more around the world to demand action on climate change, the German government released its long-awaited climate package. The following week in New York at the UN Secretary-General’s Climate Action Summit Germany’s Chancellor Merkel announced the commitment to reach net zero greenhouse gas emissions by 2050, which is now to be reflected as an objective in the Climate Bill. However, it is now clear that the draft Climate Bill adopted by cabinet on 9 October together with the final 2030 Climate Action Programme would enshrine in law 2030 targets that are insufficient for the Paris Agreement, and thus also insufficient to get to zero emissions by 2050.
While it is positive that the German Government has moved forward with legislating sectoral targets and responsibilities and with a package to achieve these targets, it is nowhere near ambitious enough to meet the objective of the Paris Agreement to limit warming to 1.5°C.
Why is Germany important?
The world is now in a race against time to increase ambition on climate action, with a deadline in 2020 for countries to submit much more ambitious Nationally Determined Contributions to the Paris Agreement. This race needs front runners and champions and at the present moment in history the European Union is central to this effort, and Germany central to what the European Union can actually do and put forward for ambitious action by 2020. This is what the Secretary-General’s Climate Action Summit in New York on 23 September was meant to be about.
What should be in the plan?
Germany has committed to reducing its carbon dioxide emissions in line with the Paris Agreement 1.5°C limit so its new climate package would have to include a ratcheting up of domestic target for 2030 that are insufficient because they were based on the former EU 2°C goal.
While Germany was an early global leader with strong policies to increase renewable energy in the electricity sector, thus effectively kick starting an accelerated global transition, a number of policy changes have significantly slowed progress in this area in recent years. A new programme would need to include clear and ambitious targets for renewables and the policies to meet those targets.
The pace of reducing emissions from industry and transport, especially from cars, has slowed, and Germany is falling far behind other countries in the transition to zero emissions mobility. The new plan would need to set strong signals for these sectors, as well as for the building sector, which has long investment time horizons. However, meaningful policy, in particular in transport and industry, faces fierce opposition and strong lobbying.
Time is critical. Germany has given up on meeting its own 40% reduction by 2020 emissions reduction targets set unconditionally back in 2007, so now it needs fast and stringent emissions reductions to make up for lost time to not only meet its current goal for 2030 of 55% reduction from 1990 levels of GHG emissions but also to get it on a Paris Agreement consistent pathway to meet its goal of zero greenhouse gas emissions by 2050.
Critical to this is the early phase out of coal – if this is not achieved nothing else close to what is needed for the Paris Agreement will be possible. Thus far the government has delayed implementing the far too late coal phase-out timeline of 2038 recommended by the coal commission. A climate plan that is consistent with the Paris Agreement would have to address this sector and phase out coal by 2030.
How does the new climate program stack up?
The pathway towards net greenhouse gas emissions by 2050 matters: if emissions are too high in 2030 then it makes it less likely and far more costly that zero emissions can be achieved by 2050, and more cumulative emissions would have to be compensated with more negative emissions later on.
Without ambitious enough targets for 2030 it is very plausible that the 2050 net zero greenhouse gas emissions goal could go the same way as the now almost defunct 2020 targets. The combination of missing its 2020 targets, insufficient measures to reach its target of 55% reduction by 2030 (that should already be under review for ratcheting up as it is not consistent with the Paris Agreement), and not placing these new policies in an overall framework aiming toward the 2050 decarbonization goal sends mixed signals to citizens and industries.
Overall, the new climate programme is based on gradual improvements that are too slow rather than showing a firm commitment to the transformative action that is needed to meet the 2050 net zero emissions goal with a pathway that is consistent with the Paris Agreement.
The new emissions trading scheme in transport and buildings is inadequate. Starting in 2021 with a fixed price of €10/tonne of CO2 and increasing to a fixed price of €35/tonne, the government recognized that in this phase, emissions in these sectors would otherwise be higher than the pathway consistent with the sectoral target, thereby implying the need to buy certificates. In a second phase, emissions trading will move to auctions from 2026, with a minimum price of €35/tonne and a maximum price of €60/tonne, which falls well short of the required 50€/tonne in 2020, rising by 10% per year, according to an assessment by the Mercator Institute for the Global Commons. The German government’s own estimates put the true cost of emissions at €180/tonne.
Implementing a carbon price that falls within normal fuel price fluctuations will do little to change driving habits. €10/tonne of CO2 translates to only about €0.03/litre of gasoline or diesel initially and €0.10/litre in five years. The program left out obvious measures such as ending the artificially low prices for diesel and jet fuel that result from low- to zero-taxes – direct subsidies to emit more, not less CO2.
To add to the insult, the amount people who commute in cars can deduct from taxes will increase1 so that especially those driving longer distances and with higher incomes will end up with more money in their pockets – not an incentive that leads to lowered emissions.
While the new program does make promises to increase public investment in infrastructure including rail and electric vehicle charging stations, there is no clear roadmap for effective systemic change to achieve Paris Agreement targets such as moving to phasing out the sale of internal combustion engine vehicles in the next decade or two.
In the building sector energy efficiency measures must be ramped up both in the rate and depth of renovation. At the same time, serious thought must be given to the longer-term, even while creating policies and incentives to spur near-term action. Encouraging replacement of oil-based heating and legislating a ban of new installations from 2026 is a no-brainer but if the goal is zero emissions by mid-century, then enabling the installation of natural gas heating systems even as hybrid systems combined with Renewable Energy is wasteful and shortsighted. Other countries in the EU are moving away from this.
Once buildings are converted to a new heating system, they have long lifetimes and it will take time and money to change them again. Encouraging new fossil fuel technologies now will lead to an undesirable carbon lock-in for decades to come, in particular given the current building sector boom in Germany. Furthermore, countries like Denmark and Norway have already committed to eliminating fossil fuels from the building sector or legislated net-zero-energy as the standard for new buildings. The current German plan may have been considered progressive a decade ago, but is very weak, given technological advances and innovative policies elsewhere.
Renewable energy obstacles
Perhaps one of the biggest problems in the overall climate package now is that rather than accelerating growth, the climate programme introduces new obstacles for renewable energy, in particular for new wind.
Germany recently committed to increase the share of renewable energy in electricity to 65% by 2030, however the current version of the climate plan 2030 and the draft climate bill threatens to undermine this. A Paris Agreement consistent renewable energy penetration for 2030 would be closer to 85%,.
Because of the need for widespread electrification of many activities and processes, zero carbon electricity is particularly important for the transition towards zero emissions by 2050 from all sectors. Increased e-mobility and production of “green” hydrogen for industry and transportation will lead to an increase in electricity demand. Thus, the percentage targets for renewables must be viewed against a background of an overall rising baseline of electricity demand.
Missing targets and policies for many sectors
Critically missing from all of the above, are the specific targets for individual sectors to contribute to reaching the overall Paris Agreement compatible emission reduction targets.
One of the key messages of the IPCC Special Report on Global Warming of 1.5°C is the need to increase efficiency, make electricity carbon-free very fast, and electrify all end-use sectors either directly or indirectly (for example through hydrogen produced with renewable electricity). Electric heat pumps and electric vehicles are far more efficient than the current, old-fashioned technologies. There are technologies to decarbonise industrial processes. To get there in a sensible way, the whole system must be considered – given the urgency of the climate crisis – as reflected in the government’s own goal of zero greenhouse gas emissions by 2050 nationally- the half-measures as announced by the German coalition government are simply not sufficient.
And what about the EU?
Germany’s climate plans always need to be considered in the European context as well as in the international context.
The overarching international climate context under the Paris Agreement is that countries agreed in 2015, based on scientific urgency, to submit revised climate pledges (NDCs) with higher ambition by 2020, and to revise these NDCs every five years thereafter, based on the best available science. The European Union is presently working through the process of developing a more ambitious NDC to be submitted in 2020 – the Member States of the European Union do not submit individual NDCs to the Paris Agreement.
That means, that in order for the EU to adopt a high level of ambition by 2020 its key member states must also be positioning in the same direction so as to support and not block increased ambition from the European Union as a whole. At the international level it is widely understood that a positive increase in ambition by the European Union would help trigger, or at least help provide a positive political environment, for corresponding action by other large emitters including China and India.
This is why Germany’s role is critical.
The incoming European Commission president Ursula von der Leyen (from Germany) has taken up the demand for increasing EU emissions reductions from at least 40% to a more ambitious 55% (with respect to 1990) by 2030.
A number of EU member states have recently called for this new target in a letter but Germany has not signed yet. The prospect that Germany, the single biggest emitter in the EU, is on the way to lock in its 2030 climate law based on its insufficient 40% target and old domestic pathways that are out of step with the Paris Agreement is a poor signal for increasing ambition in the EU. Germany stands to lose its reputation as a climate policy leader within the EU and risks becoming a laggard, which would int turn undermine the move towards more ambition at the EU level and possibly globally.
But the last word on the climate law has not been spoken. To become law, the proposed bill needs to pass both chambers of the German parliamentary system, which also requires the agreement of other parties, including the Greens, who have published their own demands for a climate law. For Germany to regain a leadership role in the push for increased global climate action, there is still a potential that the current proposal might only be a stepping stone towards Paris Agreement compatible climate action in Germany.
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