ZEW Energy Market Barometer - CO2 Reduction of 40 Percent Not Realisable due to Current German Law

The German government will not be able to reach its goal of reducing the country’s CO2 emissions by 40 percent by 2020, as compared to 1990, due to its current environmental policy. This is the opinion of the vast majority of roughly 200 energy market experts who are regularly asked for their opinion on energy economic issues in the ZEW Energy Market Barometer. (For further information on the Energy Market Barometer, see below.)

Only 26 percent of the experts expect the German government to reach its reduction goal of 40 percent by 2020. In the opinion of 61 percent, this reduction can only be realised if additional taxes on CO2 emissions are introduced, such as a CO2 tax for businesses and households. Such taxes have already been discussed in France but were put on hold due to constitutional issues and objections concerning economic policy. However, experts do see a chance that a CO2 tax will be introduced in Germany. 73 percent of the experts deem it economically viable for businesses and households, 60 percent deem it politically realisable. However, 58 percent do not think that a lifetime extension of nuclear power plants will play a significant role in reaching the 40 percent goal.

Overall, the experts’ assessment is in line with studies seeing a need for political action in order to achieve this goal. The Energy Prognosis 2009, conducted by IER Stuttgart, RWI Essen and ZEW Mannheim, has recently stated that under current law, emissions can only be reduced by 34 percent. The Prognosis has also shown that a lifetime extension of nuclear power plants would improve the CO2 balance, but that a reduction of 40 percent could not be achieved by this measure only.

"The government’s 40 percent goal has to be viewed critically," says Dr. Andreas Löschel, head of the department Environmental and Resource Economics, Environmental Management at the Centre for European Economic Research (ZEW), Mannheim. "About half of all emissions in Europe are caused in sectors which are subject to the transnational EU Emissions Trading System (EU ETS). National reduction goals, such as the 40 percent goal in Germany, stand in contrast to the principle of European emissions trading because the amount of emissions in Germany simply does not matter anymore. The only thing that counts is the emissions cap stipulated by the EU ETS," Löschel says.

Information on the ZEW Energy Market Barometer

The ZEW Energy Market Barometer is a biannual survey among approximately 200 experts from research and practice (energy supply companies, energy business and energy service companies). The experts are asked for their short- and medium-range expectations concerning the development of national and international energy markets (short-range expectations: six months, medium-range expectations: five years). The complete results of the latest survey (inquiry period: May 2010) are published in the ZEW News 07/08-2010 and is available (German language only) online.

For further information please contact

Prof. Dr. Andreas Löschel, Phone: +49 (0)621/1235-200, E-mail: loeschel@zew.de

Dr. Tim Mennel, E-mail: mennel@zew.de