Green Transition

Research and Policy Advice for Structural Change in the German Economy

Dossier, 18.06.2024

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Green Transition

The green transition is a key topic of our time. In a broader sense, it describes the comprehensive change in the German and European economy towards a more sustainable, environmentally friendly and future-proof way of doing business. In a narrower sense, the green transition is understood as a process of generating energy in an increasingly greenhouse gas-neutral way.

This transition is undisputed. It is necessary to combat climate change and offers immense opportunities for innovation, growth and the creation of new jobs in Germany – provided it is strategically planned and implemented correctly.

What is the Green Transition About?

At its core, the green transition is about replacing fossil fuels with renewable energy, increasing energy efficiency and establishing a circular economy.

The green transition requires considerable investment in new technologies and infrastructure as well as adjustments to legislation and regulation. Firms need to change their production processes, develop new business models, and offer sustainable products and services.

On the one hand, economic research and policy advice support areas that are negatively affected by the green transition, such as the German coal-mining regions, which are receiving funding for structural changes. On the other hand, economic research focuses on economic sectors that are growing, such as digitalisation and robotics.

The Role of the Halle Institute in the Green Transition

This structural change affects all areas of the economy, from industry and the service sector to agriculture. Energy-intensive sectors in particular face the challenge of drastically reducing their emissions while remaining competitive.

This structural change requires innovative approaches and close cooperation between business, science and politics. The Halle Institute for Economic Research (IWH) is facing this challenge and is positioning itself at this interface with its research and policy advice.

Among other things, the researchers at the Institute analyse the economic impact of the green transition, evaluate the effectiveness of political measures, and provide important findings for the design of funding programmes and regulations. Through well-founded analyses and forecasts, they contribute to mastering the challenges of structural change and making the best use of its potential.

All of this takes place within a European and international framework: Through networked research projects, conference participation, and the exchange of visiting academics, the Halle Institute's research and policy advice are at the cutting edge. They are linked to other key topics at the institute, including research on business cycles, financial stability, productivity, and demographics.

The European Dimension of the Green Transition

The green transition offers an opportunity to successfully position Germany as a leader in sustainability and innovation. By developing and exporting green technologies and solutions, the German economy can benefit not only ecologically but also economically.

For this to succeed, however, Germany must avoid taking a unique economic path and instead proceed in a coordinated manner across Europe, as it does in other areas. The Halle Institute also advocates market-based instruments to support this process. 

According to the Halle Institute, the European Union (EU) is the key driver of the green transition, along with price incentives. In order to increase public acceptance, CO2 reductions should take place where it is most cost-effective within the EU.

In a strategy paper published on 18 June 2024, entitled “Six Points for an Efficient Green Transition” ("Sechs Punkte für eine effiziente grüne Transformation"), Reint Gropp and Oliver Holtemöller, President and Vice President of the Halle Institute, therefore state that energy production and consumption should not be regulated in a piecemeal manner. Instead, the authors recommend a set of coordinated points for the green transition that are only effective as a package.

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Reint Gropp and Oliver Holtemöller: "Ein Plan zur grünen Transformation" (guest article)
in: Frankfurter Allgemeine Zeitung, 17.06.2024

Oliver Holtemöller: "BASF kehrt Deutschland den Rücken? Ökonomen fordern Reaktion der Ampelregierung"
in: Berliner Zeitung, 31.05.2024

Oliver Holtemöller: "Die Spur der Kohlemilliarden": MDR-Langfristprojekt verfolgt in Echtzeit, wohin Investitionen fließen
in: Mitteldeutscher Rundfunk, 30.11.2023

Oliver Holtemöller: "Wohin fließen die Kohlemilliarden?"
in: Mitteldeutscher Rundfunk, 28.11.2023

IWH: "Von Aktivismus bis zur Kohle: Vielfältiges MDR-Programm zur Weltklimakonferenz 2023 Hauptinhalt"
in: Mitteldeutscher Rundfunk, 24.11.2023

Oliver Holtemöller: "Wirksamkeit der Strukturförderung: Wohin gehen die 'Kohlemilliarden'?" (podcast interview)
in: revierwende.de, 15.11.2023

IWH: "Wie weit ist der Strukturwandel in Deutschlands Kohlerevieren?"
in: rbb Rundfunk Berlin-Brandenburg, 09.11.2023

Oliver Holtemöller: "IWH-Bericht über Verwendung von Milliarden aus dem Kohleausstieg" (Min. 14:00)
in: ARD tagesschau, 18.08.2023

IWH: "Bund stellt Milliardenhilfen für Kohle-Regionen zur Verfügung, doch die werden kaum genutzt"
in: TAG24.de, 17.08.2023

IWH: "Kohleausstieg: Fördermittel nur zu «kleinem Teil» abgerufen"
in: FAZ.net, 16.08.2023

IWH: "Kohleausstieg: Fördermittel nur zu "kleinem Teil" abgerufen"
in: Zeit Online, 16.08.2023

IWH: "Gutachten zu Kohlemilliarden: Mehr Mittel in Verfügbarkeit von Arbeitskräften lenken"
in: Sächsische.de, 16.08.2023

Oliver Holtemöller: "Kohleausstieg - Ein gerettetes Dorf will eine Zukunft" (Min. 11:44)
in: Bundeszentrale für politische Bildung, 06.06.2023

IWH: "IWH startet Studie zur Wirkung der "Kohlemilliarden"
in: Zeit Online, 15.12.2022

Steffen Müller: "Was passiert mit Deutschlands Industrie bei einem Gasmangel?"
in: Spiegel Online, 12.11.2022

Reint Gropp: "Strukturhilfen für Braunkohleregionen: Notwendiger Umbau"
in: taz.de, 07.10.2022

Oliver Holtemöller: "IWH-Studie zum Kohleausstieg: Ohne Abwanderung von Arbeitskräften wird der Strukturwandel nicht vonstattengehen"
in: Leipziger Internet Zeitung, 18.08.2022

Media Cooperation

The “Coal Update” (Das Kohleupdate)

Forty billion euros of taxpayers' money will be invested in Germany's lignite mining regions by 2038. Who will benefit from this funding? And will the investment pay off?

The Halle Institute's expert advice as part of the project "The trail of Coal Billions" (Die Spur der Kohlemilliarden”) by Mitteldeutscher Rundfunk (MDR) and Hoferichter & Jacobs GmbH.

Selected Publications

Events

In addition to research and reporting, the Halle Institute organises events that foster dialogue between politics, business and research. The focus is on topics such as rising energy prices, the restructuring of the German economy, and Germany's role in the European Green Deal.

Projects

Various projects have been and are being realised at the Halle Institute that deal with issues of green transition. These include:

Our experts

All experts, press releases, publications and events on "Green transition"

 

Publications on "Green transition"

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Too Poor to Be Green? The Effects of Wealth on the Residential Heating Transformation

Tobias Berg Ulf Nielsson Daniel Streitz

in: SSRN Working Paper, 2024

Abstract

Using the near-universe of Danish owner-occupied residential houses, we show that an exogenous increase in wealth significantly increases the likelihood to switch to green heating. We estimate an elasticity of one at the median of the wealth distribution, i.e., a 10% increase in wealth increase raises green heating adoption by 10%. Effects are heterogeneous along the wealth distribution: all else equal, a redistribution of wealth from rich households to poor households can significantly increase green heating adoption. We further explore potential channels of our findings (pro-social preferences, financial constraints, and luxury goods interpretation). Our results emphasize the role of economic growth for the green transition.

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Inflation Concerns and Green Product Consumption: Evidence from a Nationwide Survey and a Framed Field Experiment

Sabrina Jeworrek Lena Tonzer

in: IWH Discussion Papers, No. 10, 2024

Abstract

Promoting green product consumption is one important element in building a sustainable society. Yet green products are usually more costly. In times of high inflation, not only budget constraints but also the fear that prices will continue to rise might dampen green product consumption and, hence, limit the effectiveness of exerted efforts to promote sustainable behaviors. To test this suggestion, we conducted a Germany-wide survey with almost 1,200 respondents, followed by a framed field experiment (N=500) to confirm causality. In the survey, respondents’ stated “green” purchasing behavior is, as to be expected, positively correlated with concerns about climate change. It is also negatively correlated with concerns about future inflation and energy costs, but after controlling for observable characteristics such as income and educational level only the correlation with concerns about future prices remains significant. This result is driven by individuals with below-median environmental attitude. In the framed field experiment, we use the priming method to manipulate the saliency of inflation concerns. Whereas sizably relaxing the budget constraint (i.e., by 50 percent) has no impact on the share of organic products in participants’ baskets, the priming significantly decreases the share of organic products for individuals with below-median environmental attitude, similar to the survey data.

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Climate Stress Tests, Bank Lending, and the Transition to the Carbon-neutral Economy

Larissa Fuchs Huyen Nguyen Trang Nguyen Klaus Schaeck

in: IWH Discussion Papers, No. 9, 2024

Abstract

We ask if bank supervisors’ efforts to combat climate change affect banks’ lending and their borrowers’ transition to the carbon-neutral economy. Combining information from the French supervisory agency’s climate pilot exercise with borrowers’ emission data, we first show that banks that participate in the exercise increase lending to high-carbon emitters but simultaneously charge higher interest rates. Second, participating banks collect new information about climate risks, and boost lending for green purposes. Third, receiving credit from a participating bank facilitates borrowers’ efforts to improve environmental performance. Our findings establish a hitherto undocumented link between banking supervision and the transition to net-zero.

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Ausstieg aus der Kohle: Herausforderungen bei der Mittelvergabe und -verteilung

Reint E. Gropp

in: Wirtschaft im Wandel, No. 1, 2024

Abstract

Der Ausstieg aus der Kohleverstromung bis 2038 ist ein wichtiger Teil der Strategie der Bundesregierung, den Ausstoß von Treibhausgasen zu verringern. Begleitet wird der Kohleausstieg seit 2020 von regionalen Subventionen (Investitionsgesetz Kohleregionen – InvKG und Bundesprogramm STARK), um die wirtschaftlichen und sozialen Anpassungsprozesse zu begleiten und die negativen Auswirkungen abzufedern. Dafür stehen bis 2038 insgesamt rund 41 Mrd. Euro bereit. Es wird dabei eine Vielzahl verschiedener Maßnahmen eingesetzt, u. a. die Verbesserung der wirtschaftsnahen Infrastruktur und der Verkehrsanbindungen, die Stärkung der regionalen Bildungsangebote sowie Forschungseinrichtungen. Das IWH hat zusammen mit dem RWI in Essen einen ersten Evaluationsbericht für die Periode von August 2020 bis Ende 2022 vorgelegt.

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Klimastresstests, Kreditvergabeverhalten der Banken und der Übergang zur klimaneutralen Wirtschaft

Larissa Fuchs Huyen Nguyen Trang Nguyen Klaus Schaeck

in: Wirtschaft im Wandel, No. 1, 2024

Abstract

Kann die Bankenaufsicht den Übergang zu einer kohlenstoffneutralen Wirtschaft unterstützen, indem sie die Kreditvergabe der Banken an Unternehmen beeinflusst? Dieser Beitrag untersucht die Kreditvergabe der Banken vor und nach dem weltweit ersten Klimastresstest in Frankreich und die Reaktion der kreditnehmenden Unternehmen. Die dem Stresstest unterworfenen Banken geben kohlenstoffintensiven Unternehmen mehr Kredite. Zugleich verlangen sie ihnen aber höhere Zinssätze ab. Die kohlenstoffintensiven Kreditnehmer, deren Banken sich dem Klimastresstest unterzogen haben, verpflichten sich eher zu ehrgeizigen Emissionszielen und integrieren eher Umweltaspekte in die Bewertung von Investitionsprojekten. Jedoch reduzieren sie weder direkt ihre Kohlenstoffemissionen noch beenden sie Beziehungen zu klimaschädlichen Lieferanten. Die Studie belegt somit einen kausalen Zusammenhang zwischen Klimastresstests der Banken und der Verringerung des Transitionsrisikos der Kreditnehmer.

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