Berlin Federal Transport Minister Volker Wissing is planning to use massive subsidies to quickly persuade Germans to buy electric cars. This emerges from a government report in which several research institutes evaluated the draft for an immediate climate protection program. The report is available to the Handelsblatt.
Accordingly, the FDP politician plans to extend and significantly increase the planned purchase premium for purely battery-electric vehicles or fuel cell cars until 2027. Anyone who buys a car with a maximum purchase price of 40,000 euros will in future receive almost twice as much instead of 6,000 euros: 10,800 euros and thus more than 25 percent of the purchase price.
In addition, there is the subsidy from the manufacturers of 3000 euros, which they should also continue to grant until 2027. For more expensive vehicles up to 60,000 euros, the minister is planning a premium of 8,400 euros instead of the 5,000 euros promised today.
From the second half of 2023, buyers will have to scrap a combustion engine car that is at least eleven years old in order to receive full funding. The value of the scrapping premium could be around 1500 euros. Both premiums are expected to decrease from 2025.
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In contrast to Federal Minister of Economics Robert Habeck (Greens), Wissing wants to continue to promote the purchase of plug-in hybrids until 2024 and not end this this year. He wants to halve the subsidy to 2250 or 1875 euros depending on the purchase price.
Coalition agreement provides for the end of the purchase premium
The move is likely to cause trouble in the coalition. According to the coalition agreement, all purchase subsidies should actually expire in 2025. It is also agreed in the coalition agreement that the subsidy should decrease continuously until then.
However, Wissing is under pressure: Despite the pandemic, the transport sector missed its climate targets by three million tons of CO2 last year, and this year alone it has to save another six million tons. However, traffic is growing year by year, and emissions are increasing with it. Wissing himself emphasizes that he wants to enable mobility, not ban it – and hopes that Climate Protection Minister Habeck will understand.
As stipulated in the Climate Protection Act, the Federal Environment Agency presented emission data for 2021 in mid-March. They show whether one of the sectors – waste management, energy, buildings, industry, agriculture, transport – has missed the annual climate targets for the previous year stipulated in the law. If this is the case, the responsible ministers must propose measures to the climate protection minister within four months with which they want to close the climate gap immediately and continue to do so in the future. A panel of experts from the research institutes Prognos, Fraunhofer ISI, Öko-Institut, Ifeu, IREES and FÖS examine whether the proposals are suitable.
Their assessment of the immediate climate protection program is available to the Handelsblatt. It is particularly depressing in the transport sector: The subsidy plans for e-cars alone are likely to cost up to 73 billion euros by 2027 and thus similar to the special fund planned by the federal government for the Bundeswehr.
Minister Wissing proposed 54 measures
Wissing introduced 53 other measures, including costly special depreciation for e-mobiles as well as funding and research programs for climate-neutral flying or the digitization of the railways and the expansion of rail and local transport. And yet, according to experts, the climate gap will remain larger than in any other sector: despite the proposals, the experts calculated 159.5 million tons of CO2 for the year 2030 – more than the transport sector currently emits in one year.
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According to the expert, with the proposed measures Minister Wissing manages to save at most 112 million tons in the time – and only if he receives the necessary money from the Bundestag. The budget planning currently only provides 5.9 billion to subsidize the purchase of e-cars. There are also corresponding doubts among the officials in the Ministry of Climate Protection. “In any case, additional measures are necessary to a considerable extent,” the officials sum up in an evaluation of the report. It is also available to the Handelsblatt.
The costs are one thing, the benefits are another: according to experts, the multi-billion dollar tax subsidy for the purchase of electric cars would at best help save four million tons a year. For comparison: A general speed limit would bring two million tons.
In contrast to the ministry, the experts have considerable doubts that a number of the proposed measures will be as effective as the ministry expects. There is always talk of “too optimistic”.
Climate-neutral flying remains a dream
The experts do not believe that the airlines will fly climate-neutrally by 2030 and thus make a contribution to climate protection. Incidentally, this also applies to local transport. According to the ministry, the “modernization offensive” that has only been promised so far should help to save one million tons of CO2. On the other hand, the experts consider it important to expand the railway in such a way that short-haul flights are no longer necessary.
The doubts also include the ministry’s assumption that in the coming year almost 60 percent of newly registered cars will be fully electric or fuel cells. The experts also do not share the hope that the purchase subsidy will encourage manufacturers to buy e-cars. Rather, the amount is “priced into the manufacturers’ pricing as a free-rider effect”. They also doubt the usefulness of the scrapping bonus in view of the prices that can be achieved on the used car market.
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The team of experts also evaluated interactions between individual measures. According to the European fleet limits, car manufacturers are obliged to sell more and more climate-neutral vehicles and by 2035 only such. Due to these “overlapping effects of the measures”, “a significantly lower additional reduction effect can be expected from the environmental bonus”. In concrete terms, this means that the taxpayers use the purchase premium to ensure that manufacturers such as BMW, Mercedes or the Volkswagen Group comply with their fleet limits.
It is not yet certain whether the grant plans will become a reality. The Ministry of Climate Protection points out that the talks are still ongoing. “At the end of the departmental coordination, the responsible state secretaries will agree on an overall draft,” said a spokesman.
After that, the countries and associations would be involved. The Expert Council for Climate Protection would also evaluate the program again. “In particular, he looks at the measures that are necessary under the Federal Climate Protection Act as immediate measures for the transport and building sectors, since the legally stipulated emission levels for 2021 have been exceeded here.” In July, the federal cabinet is supposed to adopt the emergency program.
After that, the Bundestag and, above all, the Budget Committee would have to agree.
More: Municipalities versus Wissing: “We are not petrol station operators”