Climate goals cannot be achieved with CO2 prices alone – report

Even with significantly higher CO2 prices on transport and heating fuels, Germany will not reach targets set in the country’s Climate Action Law, shows a report commissioned by the German Environment Agency (UBA). Germany in 2021 introduced national emissions trading in areas not already covered by EU emissions trading (EU ETS). In the transport sector, the report found that a rapid rise in the price of CO2 supports a faster electrification of vehicles. At the same time, however, the availability of alternatives, such as public transport and rail freight transport, would be “essential prerequisites for the modal shift effect and for the acceptance of the CO2 price”. At the moment, further instruments will be necessary in addition to the CO2 price in order to achieve the transport sector greenhouse gas reduction targets, according to the analysis. In the building sector, the target is only achieved when higher CO2 prices affect not only the choice of a heat supply system but also lead to an early replacement of fossil heating systems.

“We also looked at how far-sighted people are when planning investments in electric vehicles or heat pumps, for example, and whether they replace climate-damaging vehicles and heating systems before the end of their service life,” said Ralph O. Harthan, energy and climate expert at the Öko-Institut, who oversaw the study. “Our results show that if you do both – plan for the future and replace earlier – emissions by 2030 […] cannot meet the targets of the Climate Action Law, not even if we assume significantly higher CO2 prices than today.”