Topic Climate Policy

Can the Financial Sector Protect the Climate? The Potential of Sustainable Finance

Climate policy aims to reduce emissions by redirecting investment from emission-intensive toward carbon-neutral assets. One key instrument, carbon pricing, guides investors and asset managers by lowering the return of fossil fuel-related assets. This chapter reviews three key mechanisms on how sustainable finance can support climate policy: first, providing investors with the necessary information ...

Paying Income Tax after a Natural Disaster

We investigate the effects of a climatic shock on individuals’ tax deduction and tax payable patterns, alongside their income dynamics. Using individual-level annual tax return data and exploiting the 2010–2011 Queensland Floods in Australia as a natural experiment, we find that the floods affect different income groups differently. They also lead to persistent higher tax deductions for high-income ...

Moral Bandwidth and Environmental Concerns During a Public Health Crisis: Evidence from Germany

Did the COVID-19 pandemic crowd out environmental concerns, as one might expect if ‘‘pools of worry’’ were finite or ‘‘moral bandwidth’’ was limited? We use Chancellor Angela Merkel’saddress to the German nation on 18 March 2020 as the threshold in a regression discontinuity in time (RDiT) to evaluate the effects of an increase in COVID-based economic and health concerns on the climate and environmental ...

Carbon Pricing: Swift Introduction of a Climate Dividend Needed, Reduce at Higher Incomes

With the transition from the German national emissions trading system to the European Emissions Trading System (EU ETS2) from 2027, final consumer prices for fossil motor and heating fuels are likely to rise significantly. This increase will affect low-income households more noticeably, as they spend a larger share of their income on energy than high-income households. Existing relief measures, such ...

Realizing the Value of Recycling – Assessing the Elements of a Policy Package

We investigate policies for increasing recycling to facilitate decarbonization within the basic material sector, including market-based policies, such as carbon pricing, advanced disposal fee and minimum recycled content requirement, and non-market policies, such as product design standard. We develop an analytical model to assess the role of these policy instruments for recycling related choices of ...

Catalyzing the Transition to a Climate-Neutral Industry with Carbon Contracts for Difference: Commentary

Quantifying the Dunkelflaute: An Analysis of Variable Renewable Energy Droughts in Europe

Variable renewable energy droughts, also referred to as "Dunkelflaute", emerge as a challenge for realizing climate-neutral energy systems based on variable wind and solar power. Using data on 38 historic weather years and an advanced identification method, we characterize European drought events for on- and offshore wind power, solar photovoltaics, and policy-relevant renewable technology portfolios. ...

Coping with the Dunkelflaute: Power System Implications of Variable Renewable Energy Droughts in Europe

Coping with prolonged periods of low availability of wind and solar power, also referred to as "Dunkelflaute", emerges as a key challenge for realizing a decarbonized European energy system fully based on renewable energy sources. Here, we investigate the role of long-duration electricity storage and geographical balancing in dealing with such variable renewable energy droughts. To this end, we combine ...

The Price Elasticity of Natural Gas Demand of Small Consumers in Germany during the Energy Crisis 2022

Understanding how consumers respond to turbulent market conditions is crucial for planning security of natural gas supply. This paper estimates the price elasticity of demand of small consumers in Germany in the period with both high price fluctuations and a fear of natural gas shortage in the aftermath of the Russian invasion of Ukraine. Using granular data between 2018 and 2023, we estimate an Auto ...

The Future Is Battery Electric: Climate Change Mitigation in Road Freight Transport

Road freight transport must switch to alternative drive technologies, such as battery-electric or hydrogen vehicles, to mitigate its impact on the climate. Preliminary results from an ongoing research project show that the fleet of battery-electric trucks as well as the number of models on offer have recently grown significantly, albeit from a very low level. This is not the case for hydrogen trucks. ...