Agora Balance Traffic Light Transport Policy: The sector continues to fall behind - Master plan needed

The Berlin think tank Agora Verkehrswende has drawn a devastating assessment of three years of coalition policy in the transport sector. The sector has hardly advanced in terms of its contribution to climate targets, there is uncertainty about the long-term financing and planning of future-proof transport infrastructures, and there is a backlog as a lead market for electromobility. The only bright spot from the perspective of transport experts is the still timid reform of road traffic law, because it placed climate protection, health, and urban development alongside the goals of fluidity and safety. Agora-Verkehrswende director Christian Hochfeld noted that the government faced challenging conditions due to the Russian war of aggression against Ukraine and the loss of affordable gas supplies. But even before the Ukraine war, the course had not been set for the electrification of the energy and transport system, also to strengthen independence.

“The coalition already showed hardly any clear common lines for the transport transition in the coalition agreement. Then, the changes through the Russian war of aggression against Ukraine pushed the task further into the background. In climate policy, transport was down the list; in transport policy, climate protection was. Progress in road traffic law and the further development of the truck toll remained isolated. In key issues such as investments, industrial transformation, and the expansion of public transportation, the common will to shape matters was lacking. In the transport sector, Germany is thus neither on course for climate, industry, nor social policy," Wiebke Zimmer, Deputy Director of Agora Verkehrswende, summed up.

Excluding transport from the sector targets for the Climate Protection Act has proven to be understandable from the government's point of view but disastrous, as it will have massive medium- and long-term effects and is only currently not apparent in the overall balance due to the good performance of the energy sector, for example. This measure ensured that the transport sector had even fewer ambitions than before. Specifically, in the area of e-mobility, confidence was further eroded by the abrupt cut in the purchase premium and the misguided debate about e-fuels and hydrogen as supposed alternatives, which are nowhere near as technologically mature or industrialized as battery-electric mobility.

Germany is Falling Behind in E-Mobility

According to Hochfeld, this has led to a collapse in the e-car market in Germany, leaving the country isolated in Europe. The target of 15 million e-cars by 2030 is now a distant prospect, with Agora analysts estimating a maximum of eight to nine million e-cars by 2030 if no further measures are taken. The coalition government has not found a path to rational and sustainable investments in rail and fleets. It also failed to tackle the important issue of reducing fossil fuel subsidies, resulting in significant deficits in achieving climate goals.

However, Hochfeld did not want to dwell too long on the sobering hindsight, proposing a set of measures for the future government that includes five key points:

• Financial Reform + Investment Initiative: Hochfeld called for an investment initiative in infrastructure, particularly in public transport, rail, and charging infrastructure. This needs to be linked with the simultaneous reduction of fossil fuel subsidies and, crucially, the introduction of a car toll as a central steering element. Germany can become climate-neutral in the transport sector by 2045 – without sacrificing mobility and without additional costs compared to what would be spent by 2045 without a course towards climate neutrality.
• Accelerated Industrial Transformation: Hochfeld demanded a forced transformation with corresponding "technological clarity" instead of unnecessary debates about the phase-out of combustion engines. On the demand side, e-mobility must be made accessible to broader sections in view of foreseeable rising fuel prices, for example by promoting smaller and used e-cars, not just expensive electric company cars. Moreover, a "Green Industrial Deal" is needed for Europe to restore the continent's competitiveness against Asia and China and make up for the lost ground. Hochfeld cited Belgium as a model, where the depreciation option for company car combustion engines will be eliminated by 2028, alone leading to an increase in the e-fleet from 15 to 60 percent. The social leasing for e-cars in France, despite flaws, is also a right approach, the demand existed, and the funding pot was empty after ten days. For the automotive industry, the opportunities are greatest with a rapid ramp-up of electromobility. Orientation and predictability, as well as a strong home market for electric vehicles, are essential, according to Hochfeld.
• Grid Integration: The electrification of the sector must go hand in hand with the grid integration of e-vehicles to lower the costs of the energy transition and increase efficiency. If Germany is not able to build €25,000 cars, it must realize it through the costs of use and lower charging prices, demanded Hochfeld.
• Vision of Fossil Exit: There also needs to be a clear plan on how the transport sector will move away from oil and gas, with a clear path for the industrialization of e-fuels and renewable fuels by 2030 and net-zero emissions by 2045. There is also a proposal from VDA that goes in the right direction, Hochfeld praised.
• Affordable Mobility: As the last but not least point, the Agora head stressed that affordable mobility beyond the car is also needed. After all, there are 20 million citizens without a driver's license and with poor connectivity in rural areas. Moreover, gasoline and diesel prices will continue to rise, increasingly incorporating the economic costs of burning fossil resources. A significant price increase is foreseeable for 2027 when the European Emissions Trading System expands to the building and transport sectors. This will make driving unaffordable for many. Therefore, a minimum expansion even in rural areas and urban-rural relations is necessary. The technology of automated driving with on-demand shuttle services is a crucial element and symbol here. Germany still has good chances here, which must be seized, both in passenger transport and logistics. The goal is a sort of "mobility guarantee."