Mixed climate policy more just and effective than focus on CO2 price – report

Decarbonising the German economy in an efficient, fair and socially accepted way would be best be done using a range of policy measures with some flexibility, rather than leaning on a smaller set of rules like a CO2 price, according to a report by the state-funded Kopernikus Ariadne project. 

Researchers at the Potsdam Institute for Climate Impact Research (PIK), along with the Institute for Economic Research (ifo), analysed three policy approaches aimed at reducing emissions: a CO2 price paid by polluters, subsidy programmes to support the transition for citizens, and regulation of polluting products. 

Using a range of these policy measures means that the burden does not fall too heavily on particular households, for example those with less financial stability or living in inefficient buildings. This in turn would help to sustain social acceptance for the transition, which is key for its success, the researchers stressed. 

The findings provide “clear recommendations for action,” said PIK researcher Maximilian Kellner. The analysis has allowed for “a structured comparison in terms of cost efficiency, distributional effects and acceptance,” Kellner said, which should inform action for a future policy mix. 

In November 2025, Federal Environment Agency (UBA) published an analysis that found, based on 2024 data, that poorer households are proportionally more burdened by Germany's national carbon price on transport and heating. This is despite them causing considerably fewer emissions than more affluent groups in society.