Berlin Unveils Climate Package as Hundreds of Thousands Take to the Streets
September 20 2019 - 12:25PM
Dow Jones News
By Bojan Pancevski
BERLIN -- Germany unveiled an array of climate policies Friday
designed to curb greenhouse gas emissions that economists said were
unlikely to provide much of a boost to the country's flagging
economy, despite a projected EUR54 billion ($60 billion) price tag
between now and 2030.
The measures, including subsidies for green power generation,
will be financed by revenues from higher taxes on polluting
activities, such as air travel and car fuel, as well as a new
carbon emission certificate trading scheme to be launched in 2021.
The package won't affect Germany's balanced budget. Despite
international pressure on Berlin to loosen the purse strings and
revive a slowing economy, the country's budget surplus is projected
to stand at over EUR40 billion in 2019.
"We are not living sustainably today, especially not with
regards to the warming of the planet," Chancellor Angela Merkel
told journalists in Berlin as she presented the measures.
Germany had been among the most vocal developed nations in
calling for reductions in greenhouse gas emissions to slow down the
warming of the planet. However, it has failed to meet its own
reduction goals over the past decade, in part because of a
government decision in 2011 to phase out low-emission nuclear
power, benefiting highly polluting coal-fueled power plants.
Under the new package, companies providing heating, power and
fuel for transportation will have to buy certificates entitling
them to emit carbon dioxide, with prices set to rise from 10 euros
in 2021 to 35 euros in 2025, resulting in higher costs to
consumers. A rise in an existing tax rebate for commuters will
soften the impact on rural communities.
The government will help pay for more than one million charging
stations for electric vehicles by 2030, while owners and buyers of
such cars will be offered new subsidies that the government expects
will help put 10 million electric vehicles on German streets in the
next decade.
The much-anticipated initiative, unveiled after marathon
overnight negotiations between Ms. Merkel's conservative Christian
Democrat Union and its coalition partners, had raised hopes among
business and economists that Berlin would use the opportunity to
stimulate the economy -- which is believed to have entered a
recession this summer -- in the manner of the Green New Deal being
discussed in the U.S.
However, economists criticized the government's renewed pledge
to rely on levies instead of public debt to finance the measures,
even though Germany is currently able to issue bonds that carry a
negative interest rate. In effect, this means that investors must
pay to lend money to Berlin's treasury.
"This is economic madness and at the same time, expected. The
balanced budget has such a high political significance that no one
dares to go against it. Not even for the climate, at a time of
negative interest rates," said Christian Odendahl, chief economist
at the Centre for European Reform, a think tank.
Mr. Odendahl said financing green subsidies with carbon dioxide
revenues was a zero-sum redistribution scheme, and that the
allegiance to "black zero" -- as Germany's goal of maintaining a
balanced budget is known -- would automatically lead to a lower
carbon price.
On the other hand, Karen Pittel, economics professor at the
University of Munich, said "the low carbon pricing will hardly
prompt any substantial reduction of emissions."
The government is under pressure to meet the target of reducing
carbon dioxide emissions to 55% of their 1990 level by 2030, as
Europe's largest economy simultaneously phases out nuclear and coal
power plant generation.
At present, nearly 40% of Germany's power comes from burning
coal, almost the same level provided by renewable energy sources
such as wind.
Politicians and officials said the environmental push was partly
designed to steal the thunder of the surging Green Party, which is
now neck-and-neck with the CDU as Germany's most popular party.
Several polls have shown that the surge of the Greens, who
captured 8.9% of the vote at the last federal election in 2017, but
are now polling at around 23%, is in a significant part due to
voters' concerns about the climate.
Hundreds of thousands of people took to the streets at 600
rallies across Germany on Friday, demanding a radical cut to carbon
dioxide emissions. Representatives of the movement rejected the
government's new measures as insufficient.
Write to Bojan Pancevski at bojan.pancevski@wsj.com
(END) Dow Jones Newswires
September 20, 2019 12:10 ET (16:10 GMT)
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