Berlin The Federal Environment Agency (UBA) insists on the dismantling of environmentally harmful subsidies. “It is paradoxical when the state supports climate protection with many billions and at the same time subsidizes climate-damaging modes of production and behavior,” criticizes UBA President Dirk Messner.
The dismantling of tax breaks for passenger cars and agricultural diesel, for the private use of fossil-fueled company cars and agricultural vehicles as well as the flat-rate travel allowance would bring the public sector additional income in the double-digit billion range. This shows a new study by the authority on environmentally harmful subsidies.
The above-mentioned subsidies could be abolished nationally. Another twelve billion euros were accounted for by tax breaks for kerosene and the VAT exemption for international flights, according to the UBA. However, this would have to be tackled at European level.
“Currently, economic incentives are being set in opposite directions – sometimes for, sometimes against environmental and climate protection,” criticizes Messner. An example of this is the “nonsensical coexistence” of diesel privileges for combustion engines and purchase premiums for electric cars.
The demand for the abolition of environmentally harmful subsidies is a recurring ritual. In view of the ongoing coalition negotiations, however, the opportunity is favorable. The Taxpayers’ Association (BdSt) also regularly criticizes the excessive subsidy practice in Germany.
Subsidies based on the “make a wish” principle
BdSt President Reiner Holznagel speaks of a “deluxe policy” when it comes to granting subsidies. In August, Holznagel criticized the 28th subsidy report for 2019 to 2022 approved by the Federal Cabinet: “Funding is not based on economic standards, but according to the make a wish-principle. So far, the grand coalition has only committed to reviewing the subsidies .
The debate could now start to move. The Greens have long warned that climate-damaging aid should be phased out. In the case of the Social Democrats, the Vice President of the SPD Economic Forum, Matthias Machnig, spoke out in favor of removing climate-damaging subsidies in order to free up money for the projects of the traffic light coalition.
“As is well known, we are running out of time when it comes to climate protection,” warns the UBA. It is therefore important to move forward quickly with the dismantling of environmentally harmful subsidies. This relieves the public budget and enables climate-friendly investments.
Half of the subsidies go to the transport sector
The UBA study shows that in 2018 almost half of the environmentally harmful subsidies identified by the authority went to the transport sector. 39 percent supported the supply and use of energy, nine percent supported agriculture and forestry, and five percent supported construction and housing.
Overall, the UBA is assuming environmentally harmful subsidies of at least 65.4 billion euros for 2018. Since then, the volume has actually increased.
Since the last estimate in 2012, according to the Federal Environment Agency, there has been little progress in reducing these subsidies. In the meantime, some aid has expired, for example for hard coal mining. However, new ones were introduced.
In the transport sector, subsidies even increased from EUR 28.6 billion to EUR 30.8 billion between 2012 and 2018. This contradicts the increase in funding programs for climate and environmental protection in recent years. “Around 90 percent of the subsidies analyzed are harmful to the climate and often have a negative impact on air quality, health and raw material consumption at the same time.”
The subsidy volume of 65.4 billion euros in 2018 stated in the study is not identical to the additional financial leeway gained for the public sector in the event of a reduction, as there may be adjustment reactions.
For example, an increase in the energy tax rate on diesel increases the incentive to save fuel and switch to an electric car. In addition, accompanying measures are sometimes necessary to cushion the social consequences, which in turn binds funds.
Tailwind from Brussels
The UBA points out that some important environmentally harmful subsidies can only be partially dismantled at national level. One example is the kerosene tax exemption on flights within and outside of Europe. The plans of the EU Commission provide for the aviation and shipping industry to be gradually included in energy taxation and for diesel and petrol to be taxed uniformly according to their energy content.
This would significantly advance the dismantling. “The federal government should use the tailwind from Brussels and campaign for an ambitious reduction in environmentally harmful subsidies at EU level,” says UBA President Messner. International agreements on CO2 pricing or the introduction of CO2 border adjustment mechanisms could also make subsidies that have so far protected domestic industries from environmental dumping superfluous.
The study contains reform proposals on how subsidies can be reduced. In the housing sector, with energy-related subsidies for the economy or in agriculture, according to the UBA, the primary aim is not to reduce the total subsidy volume. Rather, the subsidies should be restructured in such a way that they mobilize investments for the socio-ecological transformation.
In some cases, the dismantling of environmentally harmful subsidies is also necessary for reasons of social justice. One example is the private use of company cars, which the state subsidizes with at least three billion euros per year. “This will mainly benefit households with high incomes. This subsidy is not only harmful to the environment, it is also socially unjust, ”says UBA President Messner. “It should be abolished.”
More: SPD politician Machnig: “We should cut climate-damaging subsidies”