What will the energy transition cost? The representatives of German economic research institutes agree on one thing: it won’t be cheap.
The leading German economic research institutes have warned against illusions about the costs of climate change.
Jan Pieter Krahnen from the Leibniz Institute for Financial Market Research said on Wednesday: “The change will be expensive.” Ifo President Clemens Fuest said at the Leibniz Economic Summit that the energy transition contributes to a global good, but it will not increase German prosperity. “Out of every 100 euros that we spend, maybe one or two euros will benefit us.”
Professor Stefan Kooths from the Kiel Institute for the World Economy said that the transformation is not a growth program: “We have to say goodbye to this illusion.” The growth rates of the German economy soon declined. At the end of the decade he still expects growth of 0.5 percent. At the same time, distribution conflicts are increasing.
Oliver Holtemöller from the Leibniz Institute for Economic Research in Halle said decarbonization increases global prosperity, but consumption opportunities in Germany are decreasing. Holtemöller criticized who would bear the costs of the transformation and referred to the lignite regions and energy prices.
“Major structural change”
On the other hand, the President of the Berlin DIW Institute, Marcel Fratzscher, said: “The transformation is a growth engine.” The natural basis of life would be preserved. Wealth should not only be measured in material goods. “Fossil energy sources must become significantly more expensive,” said Fratzscher. However, the climate change will only be successful if there is social acceptance.
Achim Wambach from the ZEW in Mannheim said that economic growth is not everything, but a measure of where people have jobs. Germany is facing a serious structural change, “this is not business as usual”.
The economic researchers sharply criticized the EU Commission’s taxonomy plans. “It’s absurd to write down a list of economic activities from which you then decide politically what is funded and what is not,” said Fuest. “It’s a planned economy.” Krahnen said: “I think that’s a bad solution.” The markets would fail them. The legislature must set limits, “the rest has to do the capital market”.