ZEW Economist Sebastian Rausch on the Federal Climate Change Act

On 10 June, the German Bundestag will discuss an amendment to the Federal Climate Change Act. The amendment had become necessary after a ruling by the Federal Constitutional Court. Professor Sebastian Rausch, head of the Research Department “Environmental and Resource Economics, Environmental Management” at ZEW Mannheim, comments on this matter.

“With the presented draft law, the German government is heeding the admonition from the Federal Constitutional Court. The stricter emission targets, provided they are actually implemented, will bring the German economy a significant step closer to becoming carbon neutral. Although the draft law includes reduction targets for the years 2030 to 2040, the German government does not want to specify until 2024 what burden each sector will have to bear. Market players should know much earlier which emission reductions they will face in the following decade, so that they can already take these into account in upcoming investment decisions. Only in this way can the Climate Change Act have the necessary incentive effect.”