06 Jan 2023, 13:17
Sören Amelang

German tax laws impede shift to low-carbon economy - analysis

Clean Energy Wire

Contradictory tax incentives are a major hurdle for making the German economy more climate-friendly, according to an analysis by Green Budget Germany (FÖS) commissioned by the Bertelsmann Foundation. Instead of promoting the energy transition, current tax regulations "often set false incentives and inhibit innovation in the field of sustainable technologies," the analysis reads. The authors lament the fact that Germany’s electricity tax does not distinguish between electricity that is produced with fossil fuels or renewables, offering no incentive to switch to low-emissions options. In the case of the energy tax, the experts criticise contradictory incentives resulting from lower taxes on diesel and heating oil, which are particularly high in emissions  compared to petrol and natural gas.

The authors also criticise the lack of incentives for the shift towards a circular economy. “There are hardly any fiscal instruments to date to steer resource consumption in Germany towards a sustainable level,” the report continues. The authors propose the fiscal promotion of corporate resource management and the introduction of a primary building materials tax to make new raw materials more expensive and thus raw material recycling much more economically attractive.

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Sören Amelang

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