PIK Researcher Edenhofer: Decarbonization in Transport Not Possible Without Higher CO2 Price

The Director of the Potsdam Institute for Climate Impact Research, Ottmar Edenhofer, has urged the future coalition government to show more courage regarding the CO2 price in response to the presentation of their coalition agreement. Particularly in the transport sector, decarbonization by 2045 would be impossible if the government does not allow the CO2 price to rise significantly more than the current 60 euros per ton in the medium term, the economist predicted to Spiegel Online. It is wrong for the coalition not to further increase the CO2 price for buildings and transport until 2026, as a reliable price path would then be missing.

"It wouldn't surprise me if energy prices in the market soon fall again. Then the incentives for savings are suddenly gone," explained Edenhofer.

Without clear guidelines, it is not apparent how the government intends to achieve the ambitious targets in these sectors. Instead of a de facto cap on the CO2 price in the coming years, Edenhofer advocated for a "well-made social compensation" where low-income earners could even benefit on balance, as the scientist advocated. He also criticized the lack of a concrete date for phasing out combustion technology.

"Even if it were possible to persuade many more citizens to buy electric vehicles with government subsidies, millions of combustion vehicles will still be on the road in 2030. And they will likely be driven extensively as long as we don't significantly raise the CO2 price," feared the climate researcher.

Edenhofer called on the coalition politicians to develop a plan for the time after 2026 with a price path that aligns with climate goals. In his view, the best measure is a fixed emission amount of CO2 that must not be exceeded. The rest should then be left to emissions trading in the transport and building sectors, as it has already been successful in the energy and industrial sectors. In combination, he proposed a "comprehensive energy tax reform."

General Praise: The door is open, but one must also walk through it

In this context, Edenhofer praised that the coalition agreement opens the doors to making Germany climate-neutral by 2045 and acknowledged that many things are moving in the right direction, such as subsidies for renewables no longer being charged to customers but to the federal budget. However, he urged that these steps also need to be taken. Additionally, the PIK scientist described the goal of producing 80 percent of energy from renewable sources by 2030 as "extremely ambitious." Furthermore, it requires "guts" if the government wants to speed up approval procedures and make two percent of the country's area available for wind and solar power. He also addressed the conflict of interest with nature conservation, for example in building power lines. However, expansion is necessary to make industry, transport, and housing "emission-free."