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Published in: List Forum für Wirtschafts- und Finanzpolitik 1-4/2024

29-12-2023 | Aufsätze

Is Germany on track to achieve 2030 climate and energy targets?

Authors: Smaranda Sgarciu, Felix Müsgens, Sebastian Osorio, Michael Pahle

Published in: List Forum für Wirtschafts- und Finanzpolitik | Issue 1-4/2024

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Abstract

It is unclear how CO2 emissions in the German electricity sector will develop until 2030. On the one hand, the amendment in the Climate Change Act (as of August 2021) aims to tighten the emission reduction targets, fostering the pathway towards a decarbonised energy system. On the other hand, the complex interplay between the main instruments used to mitigate carbon emissions, fuel prices and the latest energy scarcity as a result of Russia’s war in Ukraine generates pressure for increased emissions.
Using an energy system model parametrised to reflect the 2021 energy market situation i.e., before Russia’s attack, our study investigates the possibility that Germany will meet its 2030 climate targets. We then provide a qualitative analysis on how results can change in light of recent events. We suggest establishing a carbon price floor that can be dynamically changed in response to the evolution of other market forces and policies. This instrument would institutionalize a more credible path towards decarbonization and offer investors certainty.

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Footnotes
1
For more information on the model see Sgarciu et al. (2023) and https://​github.​com/​BTU-EnerEcon/​EM.​POWER-INVEST.
 
2
Please note that Sgarciu et al. (2023) includes the complementary results of the capacity expansion problem and the analysis of employment effects that coal phase-out has on the Lusatian region.
 
3
The sectors included in the legislation are energy, industry, buildings, transport, agriculture, waste and other, land use, land-use change and forestry.
 
4
While some of the increase may be due to the exercise of market power (see Müsgens (2006) as well as Müsgens and Ockenfels (2006) for a discussion of market power on electricity markets), the main cause is the supply shock.
 
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Metadata
Title
Is Germany on track to achieve 2030 climate and energy targets?
Authors
Smaranda Sgarciu
Felix Müsgens
Sebastian Osorio
Michael Pahle
Publication date
29-12-2023
Publisher
Springer Berlin Heidelberg
Published in
List Forum für Wirtschafts- und Finanzpolitik / Issue 1-4/2024
Print ISSN: 0937-0862
Electronic ISSN: 2364-3943
DOI
https://doi.org/10.1007/s41025-023-00255-0

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