With the Federal Climate Change Act, Germany has committed itself to reduce its CO2 emissions to almost zero by 2050. For Germany to achieve this goal, more electricity must come from renewable energies; besides, houses, transport, and industry must become largely climate-neutral. Extensive investments are needed to accomplish this:
- Building sector: Old oil and gas heating systems must be replaced by modern gas heating systems or heat pumps. Additionally, houses must be insulated so that they require less energy.
- Industrial sector: The industry must become more energy-efficient and use innovative processes.
- Energy sector: Renewable Energies must be significantly expanded. At the same time, investments are needed to ensure secure power and grid stability.
Distorted price signals
A cross-sectoral regulatory framework is necessary to coordinate the required investments in the coming decades and specifically avoid CO2 emissions. However, the burden of taxes, levies, and charges concerning the emissions caused, differs in the current system depending on the energy source.
Especially in the case of electricity, the share of “state cost components” (for example, EEG levy, network charges, electricity tax) is significantly higher than for gas or heating oil, for example – at least per ton of greenhouse gases emitted. This different burden on energy sources distorts the price signals and makes efficient cross-sectoral CO2 avoidance more difficult. From an economic point of view, uniform CO2 pricing would make sense, as the price signals would then be efficient concerning CO2 emissions.
