Emerge more sustainable from the coronavirus pandemic

UBA presents 15-point plan to restart the economy, focusing on energy and mobility

A PV power plant in the country side.Click to enlarge
The wind and solar power industries have been a driver for sustainable jobs.
Source: evoks24 / Fotolia

The German Environment Agency (UBA) has presented a plan on how to design the coronavirus stimulus packages to target environmental protection. "Environmental protection and climate action have been high on the political agenda in recent times and both will remain of major importance after the coronavirus crisis. We should be wary about losing sight of these acute problems as we restart the economy. The restart can only be viable for the future if the funding is used to drive a transformation to a sustainable and climate-neutral society. Investing in obsolete technologies and structures would aggravate the environmental crisis, prevent innovation, slow our competitiveness and put our implementation of the Paris Agreement a long way off," said UBA's President Dirk Messner. Originally presented in May the plan is now available in English.

According to UBA, it is important to shift the tax burden away from labour and towards the costs of environmental damage. Tax relief should be granted for environmentally friendly technologies such as the use of renewable energies in the transport sector or for resource-saving behaviour. In the long term, the share of environmental taxes in total tax revenues should increase so that the costs of environmental damage are more heavily charged to polluters and not to society. UBA also advises a gradual reduction of environmentally harmful subsidies - for example, the unfavourable taxation of diesel or tax exemptions for kerosene. Revenue loss for the state from the kerosene tax waiver alone is 8.3 billion euros (2018).

In recent years, the wind and solar power industries have played a key role in creating green and sustainable employment. Unfortunately, expansion of wind power in Germany has come to a near standstill and development in the solar power sector is also slow. "However, renewable energies will become the most important source of energy for the power, heating and transport sector. Total installed capacity of wind energy must increase to between 150 and 200 gigawatts (GW) by 2050 and photovoltaic capacity to between 200 and 300 GW if we are to achieve our greenhouse reduction goals. This requires a gross capacity increase of 7.7-10 GW in annual wind and photovoltaic capacities. It is urgent that we step up the current, significantly lower rate of expansion," said Prof. Dr. Harald Bradke, Head of Competence Center Energy Technology and Energy Systems at the Fraunhofer Institute for Systems and Innovation Research (ISI), who presented the UBA paper together with UBA's President Messner. UBA has proposed a development package for wind energy and photovoltaics which raises the expansion corridor for onshore wind energy and photovoltaic energy to 6 GW/year each and proposes eliminating the ceiling of 52 GW on solar energy capacity. Local trade could experience an upswing if there were a requirement to install photovoltaic systems in new buildings and for roof renovations.

In the area of mobility, UBA proposes that the federal government temporarily double its share of the "environmental bonus" incentive granted for electric vehicles. A concurrent bonus for purchasing private charging stations might also be meaningful. "I do not think much of granting a purchase bonus for vehicles with combustion engines though, except perhaps in the case of particularly efficient hybrid vehicles. Public funding should be put to use to offset the losses in revenues in bus and rail traffic as a result of the coronavirus pandemic, to further expand local public transport and to promote cycling and walking," said Mr Messner.

"It is absolutely crucial that this crisis taken as an opportunity to promote sustainable economic growth. It will place Germany in a good position to generate income over the medium and long term," said Dr. Fritzi Köhler-Geib, Chief Economist at Kreditanstalt für Wiederaufbau (KfW), commenting about the UBA paper. "A return to growth and a transformation to a more sustainable economy are both possible. Planning certainty and sufficient time for adaptation are crucial in this context. In my view, we must start with the following 5 points: strengthen our crisis resilience, achieve climate neutrality, increase productivity through innovation and digitalisation, use international networking and avoid nationalising value chains, and strengthen Europe."

Another recommendation made in the new UBA paper is a socio-ecological reform of Germany's financial system. In the energy and mobility sectors in particular, UBA envisions significantly more financial incentives for environmentally friendly behaviour - while ensuring greater equity at the same time. "We must reduce environmentally harmful subsidies and focus more attention on the fairness of our financial system. An ecological tax reform will succeed if the public perceives it as fair. Only then will we gain acceptance for a green restart of the economy," said Mr Messner.

UBA states that more fairness could start with a significant reduction in electricity prices through a short-term reduction in the renewable Energy Sources Act (EEG) surcharge. According to the UBA proposal, existing plants connected to the grid before 31 December 2016 would be financed through the federal budget and, from 2021, increasingly from carbon pricing. Lower electricity costs would immediately benefit lower-income households in particular and should be accompanied by a short-term adjustment of monthly electricity payments. Purchasing power is thus increased and it stimulates the economy. Sectors such as gastronomy, trade and services, which have been particularly affected by the crisis, would benefit. The EEG differential costs currently amount to around 25 billion euros annually. A 75-percent reduction in the surcharge would relieve the burden on non-privileged electricity customers by 18.7 billion euros per year.

The European Union is the umbrella for all national measures, especially the European Green Deal. "The Green Deal plays a significant role as we fight the economic impact of the coronavirus pandemic. Germany should support the EU Commission in promoting it during its EU Council presidency until the end of 2020. Furthermore, the federal government should aim to raise Europe's climate goal to at least 55 percent by 2030. It is the only way we can reliably set the course of climate neutrality by the year 2050," said UBA's President Messner.