Berlin Federal Transport Minister Volker Wessing plans to use huge subsidies to quickly persuade Germans to buy electric cars. This stems from a government report in which several research institutes evaluated the draft of the immediate climate protection program. The report is available to Handelsblatt.
Accordingly, the politician FDP plans to extend and significantly increase the planned purchase premium for battery electric or fuel cell cars until 2027. Anyone who buys a car with a maximum purchase price of 40 thousand euros will in the future receive double that amount instead of 6000 EUR: 10,800 EUR and therefore more than 25 per cent of the purchase price.
In addition, there is a subsidy from manufacturers of 3,000 euros, which they should also continue to give until 2027. For more expensive cars worth up to 60,000 euros, the minister plans 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 vehicle with a combustion engine that is at least eleven years old in order to receive full financing. The value of the scrapping premium can be around 1500 euros. Both treatments are expected to decline from 2025.
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Unlike Federal Economy Minister Robert Habeck (Greens), Wissing wants to continue promoting plug-in hybrid purchases until 2024 and not finish this year. He wants to halve the support to 2,250 or 1,875 euros depending on the purchase price.
Electric car: a coalition agreement that stipulates the end of the purchase premium
This move is likely to cause problems in the alliance. According to the coalition agreement, all purchase subsidies should actually end in 2025. It was also agreed in the coalition agreement that subsidies would have to decrease continuously until then.
Still, Wesing is under pressure: Despite the pandemic, the transportation 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, the traffic is increasing year by year, and so are the emissions. Wesing himself stresses that he wants to enable mobility, not ban it — and he hopes Climate Protection Secretary Habek will understand.
As mandated by the Climate Protection Act, the Federal Environment Agency submitted emissions data for 2021 in mid-March. They show whether a sector — waste management, energy, buildings, industry, agriculture, and transportation — missed the prior year’s annual climate targets set in the law. If this is the case, responsible ministers should propose measures to the climate protection minister within four months in 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 examines whether the proposals are appropriate.
Their evaluation of the immediate climate protection program is available to Handelsblatt. It is particularly frustrating in the transport sector: the cost of subsidy schemes for e-cars alone is likely to reach 73 billion euros by 2027, and is thus similar to the special fund planned by the Federal Government for the Bundeswehr.
Volker Wessing suggested 54 actions
Wesing introduced 53 other measures, including costly private consumption of electronic cell phones as well as funding and research programs for climate-neutral aviation or railroad digitization and rail expansion and local transportation. However, according to experts, the climate gap will remain larger than any other sector: despite the proposals, experts calculated 159.5 million tons of carbon dioxide for 2030 – more than the transport sector currently emits in one year.
>> Read also here: Wissing no longer wants to expand waterways
According to the expert, with the proposed actions, Minister Wesing was able to save no more than 112 million tons at that time – and only if he received the necessary funds from the Bundestag. Budget planning currently provides only 5.9 billion to support the purchase of electronic cars. There are similar skepticism among officials at the Ministry of Climate Protection. “However, additional measures are largely necessary,” the officials summed up in evaluating the report. It is also available for Handelsblatt.
The costs are one thing, the benefits are another: according to experts, a billion-dollar tax subsidy for the purchase of electric cars will help, at best, save four million tons per year. For comparison: the general speed limit would bring in two million tons.
Unlike the ministry, experts have great doubts that a number of the proposed measures will be as effective as the ministry expects. There is always talk of being “overly optimistic”.
Climate-neutral flying remains a dream
Experts do not believe that airlines will fly climate-neutral by 2030 and thus contribute to climate protection. By the way, this also applies to domestic transport. According to the ministry, only the “modernization offensive” undertaken so far would help save one million tons of carbon dioxide. On the other hand, experts consider it important to expand the railway so that short-haul flights are no longer necessary.
The doubts also include the ministry’s assumption that next year nearly 60 percent of newly registered cars will be electric or fuel cell. Experts also don’t share the hope that purchase support will encourage manufacturers to buy e-cars. Instead, the amount is priced into manufacturers’ prices as a free effect. They are also skeptical about the usefulness of a scrap bonus in light of the prices that can be achieved in the used car market.
>> Read also here: Unclear: why? Currently, FDP ministers hardly notice
The panel of experts also evaluated the interactions between the individual metrics. According to the limits of the European fleet, car manufacturers have to sell more and more climate-neutral cars and only by 2035. Because of these ‘overlapping effects of actions’, ‘a further reduction effect that is significantly lower than the environmental reward can be expected’. In a concrete sense, this means that 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 scholarship plans will become a reality. The Department of Climate Protection notes that talks are still ongoing. “At the end of inter-ministerial coordination, the responsible state ministers will agree on a comprehensive draft,” a spokesperson said.
After that, states and associations will be involved. The Expert Council on Climate Protection will also evaluate the program again. “In particular, measures needed under the Federal Climate Protection Act are seen as immediate actions by the transportation and construction sectors, as emissions levels legally mandated 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 will have to approve.
more: Municipalities vs. Wessing: ‘We are not gas station operators’
This article first appeared on May 6, 2022 at 3:45 pm.