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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Power Generation and Structural Change: Quantifying Economic Effects of the Coal Phase-out in Germany

Katja Heinisch Oliver Holtemöller Christoph Schult

in: Energy Economics, 2021

Abstract

In the fight against global warming, the reduction of greenhouse gas emissions is a major objective. In particular, a decrease in electricity generation by coal could contribute to reducing CO2 emissions. We study potential economic consequences of a coal phase-out in Germany, using a multi-region dynamic general equilibrium model. Four regional phase-out scenarios before the end of 2040 are simulated. We find that the worst case phase-out scenario would lead to an increase in the aggregate unemployment rate by about 0.13 [0.09 minimum; 0.18 maximum] percentage points from 2020 to 2040. The effect on regional unemployment rates varies between 0.18 [0.13; 0.22] and 1.07 [1.00; 1.13] percentage points in the lignite regions. A faster coal phase-out can lead to a faster recovery. The coal phase-out leads to migration from German lignite regions to German non-lignite regions and reduces the labour force in the lignite regions by 10,100 [6300; 12,300] people by 2040. A coal phase-out until 2035 is not worse in terms of welfare, consumption and employment compared to a coal-exit until 2040.

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Kommentar: Ohne Konsumverzicht keine CO2-Reduktion – auch, wenn man auf Innovation setzt

Oliver Holtemöller

in: Wirtschaft im Wandel, No. 2, 2020

Abstract

In der Diskussion über die deutsche Klimapolitik steht häufig die Frage im Mittelpunkt, mit welchen Instrumenten sich eine Reduktion der CO<sub>2</sub>-Emissionen am wirksamsten erreichen lässt. So werden etwa die Vorund Nachteile von CO<sub>2</sub>-Steuern im Vergleich zur Versteigerung von CO<sub>2</sub>-Zertifikaten und die Reihenfolge der Abschaltung von Braunkohlekraftwerken diskutiert. Neben diesen eher mikroökonomischen Aspekten hat die Klimapolitik weitreichende makroökonomische Konsequenzen.

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Coal Phase-out in Germany – Implications and Policies for Affected Regions

Pao-Yu Oei Hauke Hermann Philipp Herpich Oliver Holtemöller Benjamin Lünenbürger Christoph Schult

in: Energy, April 2020

Abstract

The present study examines the consequences of the planned coal phase-out in Germany according to various phase-out pathways that differ in the ordering of power plant closures. Soft-linking an energy system model with an input-output model and a regional macroeconomic model simulates the socio-economic effects of the phase-out in the lignite regions, as well as in the rest of Germany. The combination of two economic models offers the advantage of considering the phase-out from different perspectives and thus assessing the robustness of the results. The model results show that the lignite coal regions will exhibit losses in output, income and population, but a faster phase-out would lead to a quicker recovery. Migration to other areas in Germany and demographic changes will partially compensate for increasing unemployment, but support from federal policy is also necessary to support structural change in these regions.

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Sinkendes Potenzialwachstum in Deutschland, beschleunigter Braunkohleausstieg und Klimapaket: Finanzpolitische Konsequenzen für die Jahre bis 2024

Andrej Drygalla Katja Heinisch Oliver Holtemöller Axel Lindner Christoph Schult Matthias Wieschemeyer Götz Zeddies

in: Konjunktur aktuell, No. 4, 2019

Abstract

Nach der Mittelfristprojektion des IWH wird das Bruttoinlandsprodukt in Deutschland in den Jahren bis 2024 preisbereinigt um durchschnittlich 1% wachsen; das nominale Bruttoinlandsprodukt wird um durchschnittlich 2¾% zunehmen. Die Durchschnittswerte verschleiern die Tatsache, dass das Wachstum gegen Ende des Projektionszeitraums aufgrund der dann rückläufigen Erwerbsbevölkerung spürbar zurückgehen wird. Dies wird sich auch bei den Staatseinnahmen niederschlagen. Allerdings wird die Bevölkerung nicht regional gleichverteilt zurückgehen. Strukturschwache Regionen dürften stärker betroffen sein. Die regionalen Effekte auf die Staatseinnahmen werden zwar durch Umverteilungsmechanismen abgefedert, aber nicht völlig ausgeglichen. Regionen mit schrumpfender Erwerbsbevölkerung müssen sich auf einen sinkenden finanziellen Spielraum einstellen. Der beschleunigte Braunkohleausstieg wird diesen Prozess verstärken, das Klimapaket der Bundesregierung hat hingegen vergleichsweise geringe Auswirkungen auf die öffentlichen Finanzen.

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