VOXEU CEPR Column
Fuel and carbon prices are typically assessed based on their effectiveness in reducing emissions, while their broader societal benefits often go overlooked. This column evaluates one of the world’s largest environmental tax experiments – Germany’s eco-tax reform – and finds that it led to sizable reductions not only in carbon emissions but also in harmful local air pollutants. Estimates reveal that two-thirds of the monetised benefits of the eco-tax stemmed from health gains linked to cleaner air and accrued disproportionately to lower-income and more polluted areas, suggesting that fuel taxes can deliver pro-poor environmental gains, even when their cost incidence is regressive.
DIW (2025), DIW Weekly Report 20+21, Berlin.
The Russian invasion of Ukraine in 2022 triggered an energy crisis in Germany, with consumer energy prices skyrocketing over the course of the year. Due to concerns about gas shortages, various programs aimed at reducing consumption were set up and the German Federal Government and numerous organizations appealed to consumers to save as much energy as possible. This Weekly Report investigates how much of the energy savings of private households (16 percent in total) was due to higher prices and how much was due to non- monetary factors, such as government appeals, public campaigns, or a fear of price increases. The results of an analysis of a comprehensive dataset on the prices and consumption of heating energy in multi- family buildings in Germany show that only about two percentage points of savings were due to higher prices. Therefore, non-monetary factors had a nearly four times greater effect on heating energy consumption at over eight percentage points, at least in the short term. The rest of the savings is due to factors such as weather. To tackle future energy crises in the short term, policymakers should utilize non-price interventions to complement the limited effect of heating energy price increases on savings.
DIW (2024), DIW Weekly Report 45, Berlin.
In 2023, heating energy prices increased by substantial 31 percent compared to the previous year, following a 33 percent increase already seen in 2022. Calculations based on data from the energy service provider ista show average price increases were the highest in the German state of Rhineland-Palatinate, and the lowest in Hamburg. Owing to these price hikes and ongoing energy-saving efforts, the temperature-adjusted heating energy consumption of two- and multi-apartment buildings in Germany covered in this study fell by an average of four percent compared to the previous year, which was slightly less than the decline observed in 2022. The biggest energy savings were seen in households in Saxony. At the same time, temperature-adjusted CO2 emissions per square meter also fell, although to a slightly lesser extent than in 2022. With heating energy prices stabilizing, the momentum in emissions reductions is expected to slow down. If Germany is to meet its climate targets, further efforts are needed, particularly in improving energy effciency in the building sector and in switching to renewable heating systems.
DIW (2024), DIW Weekly Report 19, Berlin.
The pace of thermal retroft of buildings in Germany remains slow. A Worst-First approach, prioritizing the retroft of ineffcient buildings, would address energy- and social policy objectives and deliver economic and climate benefts. Data from the German Socio-Economic Panel (SOEP) show how such an approach would protect especially low-income households often living in very ineffcient buildings from heating costs risks. This group comprises 28 percent of all tenants and 13 percent of all homeowners. Yet, uncertainty about the cost-beneft of retroftting and other priorities of homeowners mean that not enough buildings are retroftted. As a result, the saving potentials, especially from very ineffcient buildings, are not being realized. This would, however, be necessary to reduce heating cost risks and energy import dependency, and to meet climate targets. Better alignment of fnancing and subsidy instruments with the ownership structure, the further development of building standards to include minimum energy performance standards, and reform of tenancy law could improve the situation.
DIW (2023), Weekly Report 39 (in German), Berlin.
Um die Klimaziele bis 2030 zu erreichen, muss der Gebäudesektor deutlich weniger Kohlendioxid (CO2) ausstoßen. Die Analyse des DIW Berlin auf Basis der Daten vom Immobiliendienstleister ista zeigt, dass der Heizenergiebedarf sowie die temperaturbereinigten CO2-Emissionen im Jahr 2022 im Vergleich zum Vorjahr um fünf Prozent gesunken sind. Der Grund dieses Rückgangs sind vermutlich die im vergangenen Jahr stark gestiegenen Heizenergiepreise. Zudem waren wohl viele Haushalte motiviert, Energie einzusparen, um eine Gasmangellage zu vermeiden und weniger Gas aus Russland zu kaufen. Regional gibt es große Unterschiede im Verbrauch und in den Preisanstiegen: Im Norden konnten die größten Einsparungen erzielt werden, aber der Heizenergiebedarf bleibt dort – vor allem im Vergleich zu den ostdeutschen Ländern – trotzdem hoch. Ob die Einsparungen in diesem Umfang beibehalten werden und dauerhaft dazu beitragen, die Klimaziele zu erreichen, ist unwahrscheinlich. Um sich aus der fossilen Abhängigkeit zu lösen und die Klimaziele zu erreichen, ist es unabdingbar, die Investitionen in die Energieeffizienz von Gebäuden zu tätigen.
DIW (2023), DIW Focus 9/2023, Berlin.
The energy and climate crisis enhance the need for energy savings. In the building sector, these savings can be achieved primarily through thermal retrofitting. So far, progress in this area has been slow. To date, less than one percent of the residential building stock in Germany is retrofitted each year. The existing support programs alone offer too little reliability for the necessary investments in additional production capacities for building materials and in the construction sector to take place. In order to accelerate the energetic modernization of buildings, minimum energy performance standards (MEPS) for buildings and binding target for the annual rate of thermal building retrofitting is necessary. Low-income households in particular could be sustainably protected from future energy cost shocks and gas savings of up to 14 percent could be achieved by end of 2025.