Topic Climate Policy

Heat Transition: Municipalities Need Federal Support in Decommissioning Natural Gas Networks

Large parts of the existing natural gas distribution networks must be decommissioned due to the decarbonization of the heat supply. However, there are neither regulatory nor economic incentives for the gas network operators to do so and delaying the decommissioning could be expensive for the remaining customers. This Weekly Report analyzes to what extent municipalities can partially decommission the ...

New Trade Models, Same Old Emissions?

This paper investigates the elusive role of productivity heterogeneity in new trade models in the trade and environment nexus. We contrast the Eaton-Kortum and the Melitz models with firm heterogeneity to the Armington and Krugman models without heterogeneity. We show that if firms have a constant emission share in terms of sales — as they do in a wide range of trade and environment models — the three ...

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 ...

Measuring Total Carbon Pricing

While countries increasingly commit to pricing greenhouse gases directly through carbon taxes or emissions trading systems, indirect forms of carbon pricing-such as fuel excise taxes and fuel subsidy reforms-remain important factors affecting the mitigation incentives in an economy. Taken together, how can policy makers think about the overall price signal for carbon emissions and the incentive it ...

Energy Transition Metals: Bottleneck for Net-Zero Emissions?

The energy transition requires substantial amounts of metals, including copper, nickel, cobalt, and lithium. Are these metals a bottleneck? We identify metal-specific demand shocks, estimate supply elasticities, and study the price impact of the transition in a structural scenario analysis. Prices of these four metals would reach previous historical peaks but for an unprecedented, sustained period ...

Sufficiency as a “Strategy of the Enough”: Curbing Ecological Crises and Injustices: A Summary of the German Advisory Council on the Environment’s Discussion Paper

A recent discussion paper Sufficiency as a “Strategy of the Enough”: A Necessary Debate by the German Advisory Council on the Environment (SRU) aims to intensify the debate on sufficiency, a central but neglected element of future-oriented policy. It defines sufficiency as the need to limit the consumption and production of ecologically critical goods and services, mainly by the economically rich, ...

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

Impacts of Electric Carsharing on a Power Sector with Variable Renewables

Electrifying the car fleet is a major strategy for mitigating emissions in the transport sector. As electrification cannot solve all negative externalities associated with cars, reducing the size of the car fleet would be beneficial. Electric carsharing could reconcile current car usage habits with a smaller fleet, but this may reduce the potential of electric cars to align their grid interactions ...

Power Sector Benefits of Flexible Heat Pumps in 2030 Scenarios

Heat pumps play a major role in decreasing fossil fuel use in heating. They increase electricity demand, but could also foster the system integration of variable renewable energy sources. We analyze three scenarios for expanding decentralized heat pumps in Germany by 2030, focusing on the role of buffer heat storage. Using an open-source power sector model, we assess costs, capacity investments, and ...

Energy-Efficient Building Renovation: Price‑Adjusted Investments Declining; Trend Reversal Needed to Reach Climate Targets

In light of rising oil and gas prices, investments in energy-efficient building renovation in Germany have risen recently in nominal terms. In 2023, around 72 billion euros were spent on the energy-efficient renovation of residential, public, and commercial buildings, about 12 billion more than in 2021. Nevertheless, investments declined by over six percent in price-adjusted terms, as construction ...