German economy minister “not convinced” of CO₂ tax

Germany’s economy and energy minister Peter Altmaier is sceptical of the idea of introducing a tax on CO₂, he said on Maybrit Illner, a political television talk show by public broadcaster ZDF. “As far as the CO₂ tax is concerned, I say: I am not convinced of it, and I also believe that it would be wrong to rush a decision." While the federal government is currently discussing “all possibilities,” the disadvantages outweigh the positive effects of such a tax, he said, referring to the yellow vests protests in France. “There will be winners and losers. […] In the end, we must not put a heavier burden on either the economy or the people,” he said, adding that it would require a “huge bureaucratic effort” to introduce a CO₂ price in a socially fair way – one that does not overburden low-income households, especially those in the countryside. The minister called emissions trading the most efficient solution from an economic perspective. Altmaier also said Germany must decrease its levy to support renewables expansion, and abolish the electricity tax.

After shying away from the debate for a long time, the governing parties and Chancellor Angela Merkel herself have recently announced a willingness to look into CO₂ pricing as a means of reaching Germany’s 2030 climate targets. There are many ways a price on carbon could be implemented, and different stakeholders favour different models, such as a cap-and-trade approach or a carbon tax. Several ministries have commissioned studies to define the design of such a scheme. Last week, politicians started to pitch ideas for the design of CO₂ pricing in Germany and the government’s climate cabinet is to discuss the subject in July.