Reforming environmentally harmful subsidies
Bertelsmann Stiftung
2023
Forum Ökologisch-Soziale Marktwirtschaft
How harmful to the climate are state subsidies in the transport and industry sectors? And can reforms protect the climate by saving money and redistributing it more effectively?
These questions are taken from the “Reforming climate-damaging subsidies” study conducted on behalf of the Bertelsmann Stiftung. The Forum Ökologisch-Soziale Marktwirtschaft (internationally known as Green Budget Germany), worked on propositions for reform while Prognos experts calculated their respective impacts.
Subsidies such as the diesel rebate damage the climate. To achieve its climate goals Germany will have to reduce both direct and indirect subsidies that promote greenhouse gas emissions.
The study shows:
The impact estimation and modelling for industry conducted by Prognos shows that reforms can have positive ecological and fiscal impacts, while only impacting cost effects on market shares, production, and employment, to a minor extent.
The modelling in the transport sector points to a substantial dismantling of subsidies. The reform of company car taxation or the diesel tax would lead to increased income tor the state, while at the same time reducing CO2.
It should be noted that our models are unable to illustrate all action/effect mechanisms and in terms of the company car reforms, in particular, we can assume far greater effects. On the one hand, faster electrification would lead to less emissions, equally, it also leads to less additional revenues due to the decreased taxation of electric company cars.
Overall, the distribution effects of the reforms are positively assessed.
Study (PDF, in German) More on the Bertelsmann Stiftung website (in German)
Project team: Andreas Brutsche, Alex Auf der Maur, Dr Andreas Kemmler, Dr Jan Limbers
Last update: 17.11.2023
Senior Expert
Grid operator TenneT has put an important power line into operation in Lower Saxony. Prognos supported the communication for the project.
The German Federal Ministry for Economic Affairs has commissioned Prognos and its partners to develop a plan for implementing the European Energy Performance of Buildings Directive in Germany.
Prognos and its partners support the preparation of the German government's 2025 to 2027 greenhouse gas projection reports.
Primary energy consumption in Germany has fallen by a total of ten percent in the last two years. However, not all sectors have been successful.
How can EU member states accelerate the expansion of renewable energies? Our report for the European Commission analyses which measures are needed to simplify approval procedures.
Prognos will support the Federal Ministry of Economics in preparing the NECP progress reports until 2027.
On behalf of the Swiss Federal Office of Energy (SFOE), we conduct an annual analysis of the development of energy consumption in Switzerland.
On behalf of the Energy Agency for Electrical Appliances (eae), Prognos annually examines the development in the efficiency of electrical appliances and their influence on energy consumption in Switzerland.
In the period 2000-2023, final energy consumption in Switzerland increased, although the costs of energy sources have risen significantly.
In our report, we estimated the steering effect of the Fuel Emissions Trading Act for the German Environment Agency on the basis of four sensitivities.
Prognos is one of the oldest economic research centres in Europe. Founded at the University of Basel, Prognos experts have been conducting research for a wide range of clients from the public and private sectors since 1959 – politically independent, scientifically sound.