The German plan to achieve climate neutrality

"If we wait, the bill left to future entrepreneurs will be unsustainable"

"For SMEs and micro-enterprises, which make up a large majority of the Swiss economic fabric, the transition is no longer a mere environmental option, but a strategic necessity to ensure our prosperity," says Christophe Barman, national co-president of the FSE.

Germany has committed to being climate neutral by 2045. Despite some early successes such as the development of renewable energies, the challenges remain colossal to reach this goal. A new study carried out by the Agora think tanks presents a whole series of measures aimed at enabling the leading European power to reach its goal.

Using scenario modeling, Agora's experts provide for the first time a detailed calculation of financing needs for each sector as well as the means to make these investments not only profitable but also socially fair. "The path to climate neutrality will require a collective effort of society," however notes Simon Müller, director of Agora Energiewende, adding that all sectors will eventually benefit.

Summary of the solutions proposed in this study, simply titled "Climate neutrality in Germany: From the goal to implementation":

1️⃣

Let's start with the issue of mobility and its necessary transformation. "Investment incentives to switch to electric powertrains will be essential for the competitiveness of the German automotive industry," recalls Dr Wiebke Zimmer, deputy director of Agora Verkehrswende. To succeed in this mobility transformation, the scenario recommends a balanced and socially fair tax reform, notably through taxation aligned with CO₂ emissions. Contrary to current ideas, the think tank believes that instead of "raising tariffs on electric cars imported from China, the EU and the German industry should prioritize cooperation with Chinese companies."

2️⃣

Among other measures mentioned, unsurprisingly the issue of money arises. To remain competitive and regain a leading position in the technologies of the future, Germany will have to invest. And massively, since Agora's experts speak of an annual need equivalent to 11% of gross domestic product (GDP) until 2045. Important clarification: the majority of these funds go beyond the climate issue alone. According to Agora, the additional investments required for climate protection from 2025 to 2045 would amount to 3% of GDP, i.e. 147 billion euros per year (three quarters of which would be borne by the private sector).

3️⃣

The path toward decarbonized electricity looks inevitable. The good news is that the study shows that renewable electricity will be affordable economically, despite the necessary costs of expanding and adapting grids in Germany. "In our scenario, electricity will not become more expensive, even though consumption will increase sharply," said Simon Müller, director of Agora Energiewende. At the same time, Germany's dependence on energy imports will decrease by nearly 85%.

4️⃣

To mobilize the necessary investments, Agora's study recommends a combination of complementary policy instruments. Price-based incentives, such as CO₂ pricing, will make fossil fuels more expensive and climate-friendly technologies more attractive. Market regulation also allows limiting harmful technologies and supporting climate-neutral technologies.
But these two solutions alone will be insufficient, Agora's experts believe. "To enable households and businesses without sufficient financial means to switch to carbon-neutral alternatives, financial support, in the form of subsidies or low-interest financing, will be necessary."

"The path laid out will certainly not become reality in all its details, conclude the authors of the study. But the study offers a coherent picture of the future and can thus create a basis for the necessary, solution-oriented discussion."

This article has been automatically translated using AI. If you notice any errors, please don't hesitate to contact us.

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