Transformation Towards Climate Neutrality

In order to achieve the national climate target of greenhouse gas neutrality by 2045, the transformation of the energy sector is crucial. The energy sector was responsible for more than a third of national greenhouse gas emissions in 2022. Of these, coal-based electricity production accounts for the largest share of emissions. This is the reason for the phase-out of coal in Germany, which is to be completed by 2038 at the latest. Due to the regional concentration - particularly in the lignite sector - significant local economic and social impacts are to be expected. Research at the Institute of Economic Policy focuses on the feasibility of the transformation and impact evaluations of selected measures. The aim is to contribute to the quantification of the consequences, which will also provide valuable information for political decisions.

In addition to greenhouse gas emissions, coal power plants cause other environmental damage too (e.g., through particulate matter emissions). At the same time, they are often important regional employers and business tax payers to municipalities. The closure of coal power plants is therefore associated with broad economic costs in addition to the intended ecological effects, as they reduce or at least change the local production potential. The costs of phasing out coal, taking into account these indirect and induced consequences, have not yet been fully quantified. In close connection with our research focusing on the housing market, we are currently analysing the development of housing price trends. The reaction of house and apartment prices to the closure of coal-fired power plants is an important indicator for identifying positive or negative welfare effects. The results of the evaluation should be included in the design of economic policy measures for the green transformation in order to ensure that they are fair in terms of distribution.

Mohnen, L., Thomsen, S., Weiß, D., Gulden, V.-S. & Ingwersen, K. (2022). Transformationsstudie zur Dekarbonisierung der niedersächsischen Wirtschaft – Eine explorative Untersuchung zu Wissensstand und Handlungsmöglichkeiten der Transformation in Niedersachsen. Hannover: Niedersachsen Allianz für Nachhaltigkeit.