Today, we are focusing on how we talk about the climate crisis and the measures to counter it. For instance: How much climate action can and does Germany want to afford at a time of economic recession? Sabine Nallinger from the Alliance for Climate and Economy and Holger Lösch from the Federation of German Industries discuss what they think about postponing climate targets, lowering the debt ceiling or cutting red tape.
Today’s fact-check also revolves around a hot debate in the German election campaign: What should the climate bonus payments that almost all parties have called for look like? Where could the money come from, and how could it be made EU-compatible? And finally, among many other news items, our opinion piece discusses the first time the 1.5-degree limit was exceeded last year: How should the climate scene react to the fact that global warming has barely been halted? Should the Paris Agreement target still be maintained?
Table.Briefings: Ms. Nallinger, Germany is in a recession. Companies lament high energy prices and too much bureaucracy, partly because of the Green Deal. Wouldn’t it make sense to postpone the climate targets?
Sabine Nallinger: I see climate targets as drivers of innovation. It’s about us as a global community making the economy climate-neutral. That’s what we decided in the Paris Agreement. So the question is no longer: do we want that? The question is: If we don’t do this, we will no longer be able to manufacture products in Germany for the global market. That’s why we have no choice but to get fully on board with the green transformation.
Mr. Lösch, above all, companies want planning security. The Federation of German Industries has often stressed that it supports climate action. Doesn’t it make sense to fully embrace the transformation, as Ms. Nallinger says?
Holger Lösch: If you’re wading through the deep mud, it’s better not to stop, but to look for faster and more efficient ways out. We need to bring the numerous paths that practically all companies have now taken toward transformation to a successful conclusion. The question is: In a world significantly changed by inflation, Covid, the Russian war of aggression and perhaps also the new US president, how can we restore the balance between ecological and economic needs? Is the way in which politicians want to achieve the climate targets truly the best way? I have a lot of questions about that. I don’t want to discuss if, but how – and with increasing acuity.
What needs to change? There are demands to push back the 2045 net zero target. Is that what you want?
Lösch: In the end, it’s not about individual annual figures. After the reform of European emissions trading, energy and large industrial plants will no longer be allowed to emit greenhouse gases in the EU after the early 2040s at the latest. This clearly shows that an isolated discussion about a national climate target does not achieve anything. We must find ways to reach our ambitious climate targets without losing competitiveness and without deindustrialization. We must prioritize this discussion in Europe.
What do you need then?
Lösch: The key question is: How can we combine competitiveness and net zero? The political focus has been too one-sided in recent years. China and the United States are doing a lot for the climate, but this is a side effect of their struggle for global economic supremacy. And we are sitting idly by. We complicate climate policy too much and regulate it too tightly. We are now complaining that hydrogen is not coming as hoped. But that’s quite clear: If hydrogen is regulated in such a complex way, then, naturally, no one will invest.
So what we need most is less bureaucracy?
Nallinger: That we all agree on. We need to cut bureaucracy, absolute pragmatism. When I hear how much administrative work the Green Deal, with its thousands of pages of downstream legal acts, will cause for companies, how can anyone prepare for that? But what else I think is important, Mr. Lösch, because you mentioned competitiveness: It is certainly welcome to see how often we here in Germany have taken the lead and then realized that others are slowly following suit: China is now talking about introducing emissions trading for its own economy, so the EU border adjustment is having an effect. The German steel industry has developed a green steel standard, which China is also considering now. When people criticize Europe for being overly ambitious, you can see it here: It also works that our partners take us seriously when we lead the way. We are an economic area that must be taken seriously, we have the power to establish global instruments.
We set green standards and the others follow?
Lösch: Other countries adopt our standards – and thus become competitors who gain our market share. China and the USA are providing incentives with subsidies that also lead to more climate action. In this way, they are gaining ground – a look at solar technology, wind power and electrolysis clearly shows this. This is part of a strategy to achieve global industrial supremacy. But I doubt China would implement an ETS as rigidly and consistently as we do. Nobody else in the world is pursuing climate action with a hard quantitative target and a hard deadline.
What other adjustments would you make?
Lösch: The heart of the game is: Who will invest what is necessary? This means that millions of people, institutions, companies, states, countries and cities have to make millions of decisions that add up to the billions and trillions needed. None of these decisions will be made if there is no business model. We should set goals, but leave room for how they are to be achieved. We are making a mistake if we set too restrictive content, quantity and quality targets. This prevents innovation. You could say: The Americans play soccer, they want to score a goal. And we say: Score a goal, but it has to be a bicycle kick with the left foot into the top right-hand corner.
Nallinger: There is another important lever: public finances. Achieving net zero by 2045 is a political goal. Our generation, the transformation generation, must set it in motion. It has to do this for the next two or three generations. This one generation cannot financially afford all of this. And for the necessary public investment …
The BDI estimates the cost at 280 billion euros between 2021 and 2030 …
Nallinger: … we need a debate on the debt ceiling. The private sector and society cannot make these investments on their own. There can be no taboos. The democratic forces of the center must work together and reconcile the various interests.
Mr. Lösch, should we ditch the debt ceiling in favor of climate transition investments?
Lösch: Ms. Nallinger has a very important point: The climate transition is a politically initiated transformation. The economy has been changing since it was founded, and it is constantly evolving. Otherwise, we would still be driving around with wood gas generators today. So far, however, the transformation has generally been brought about by markets, technologies and customer demands. Now we are going through a politically driven transformation with a deadline. When this is combined with politicians’ desire to control things in detail, we end up where we are today. We are fully aware that the industry will look different in many areas in 50 years’ time. However, the discussion about the debt ceiling simply falls short of the mark. We need to analyze what the government is funding now and what it will have to fund in the future. We will have to hold tough debates on this. There are new, different needs, for example in defense. These double-digit billion sums will have to be raised in the future. We have to talk about what the government should do, what it can do, where it gets the money from, and what it spends it on. We have to strike a balance between ecology, economy and social issues. This is certainly not an easy task, but it is unavoidable.
So we get rid of the debt ceiling?
Lösch: We firmly oppose the idea of abolishing the debt ceiling across the board. A robust national budget is very valuable. We need to prioritize. We need to make things more efficient and simpler. We need to offer better incentives and framework conditions for investment. However, we may also have to talk about very clearly defined special funds for key investment tasks, as a generational task.
In the election campaign, there is a lot of talk that climate policy drives the deindustrialization of Germany. Do you agree with this?
Lösch: Yes, I see the danger. It’s already happening. Deindustrialization means that the share of industry in GDP is falling significantly. This process has been going on for several years and has recently accelerated. But the phenomenon has many causes. Germany as a business hub has deteriorated across the board. We have problems with demographics, digitalization, but also with the design of our green transformation. Our approach to implementing climate action is not the only cause of our problems. Many, but not all, of Germany’s problems are home-made. Not all of them are the result of the last three years.
Nallinger: We must honestly discuss deindustrialization and talk about which processes will no longer exist in Germany in the future. Take ammonia production, for example, which we will most likely no longer produce here in Germany on the same scale as today.
Value chains are constantly changing. However, we cannot apodictically decide which part of the value chain we will no longer want to have in Germany from now on. This is simply not possible because different industries are closely interlinked. You can’t cut off one energy-intensive foot and let the rest run as before. Of course, things are changing. But what I strongly oppose is a government or civil society decision on what we do or don’t do in industry.
Nallinger: I’m right there with you. But there is a huge uncertainty in the economy, especially in the energy-intensive sector. Do we have a future here? Do we have the right framework conditions? Are we still welcome here at all? And that is poison for the economy. That’s why we have an investment backlog. That’s why we should have an honest discussion about what will most likely no longer exist here in the future.
The steel and automotive industries are currently facing major problems in Germany. How much of this is the fault of climate policy?
Nallinger: With steel, China’s industrial policy, which dumps its overproduction here, is clearly the main culprit. Climate policy is also not responsible for the crisis in the automotive industry. In fact, the industry and governments lacked a strategy for ramping up electromobility and its supply chains for a long time. Although the EU fleet limits set a target early on, the path to achieving it remains unclear. This is now the result.
Lösch: The direct and indirect effects of global climate policy are already impacting us: China is massively subsidizing the EV industry. Whether only one out of ten companies is left in ten years is irrelevant for China – the main thing is that this company dominates the global market. The US Inflation Reduction Act is also putting pressure on the German industry. On top of this, climate legislation in the EU is too complicated and bureaucratic. Pressure is coming from outside Europe, and progress is being slowed down from within.
Can we retain all industries in Germany? Or do some basic industries produce so cost-effectively elsewhere that they cannot be subsidized?
Lösch: I find this position fatalistic. We have highly optimized clusters of basic industries and downstream value creation in Germany. If we have to give up entire industries to achieve our climate targets, we have chosen the wrong concept. We need to take a smarter structural approach. If value creation is changing, this is a development that we should actively shape – not simply accept.
Nallinger: But we will not be able to keep every process step in the basic materials sector in Europe. We need to be honest about this, otherwise it will create economic uncertainty. The energy transition is undeniably associated with high investments, but there have always been such investments, for example in nuclear power. Now it is future investments in renewables and backup power plants. Surely, there can be a basic consensus that these investments are necessary and will help us move forward.
What do you think the next German government needs to implement quickly to achieve the climate targets and keep value creation in the country?
Lösch: Everything that makes investment and innovation easier, faster and better. Germany must become more innovative. The framework conditions for the industrial sector – including, for example, a reliable energy supply with competitive prices – simply have to improve. And we need robust protection against unfair competition.
Nallinger: The industry and economy need reliability. The political framework conditions cannot change completely after every election. We need infrastructure investment so that industry can continue to grow here. And politicians must do more to moderate conflicts – for example, when it comes to social compensation for property renovation.
Sabine Nallinger is a board member of the Alliance for Climate and Economy, a climate policy initiative founded by German company executives. Holger Lösch is Deputy Director General of the Federation of German Industries (BDI), the umbrella organization of the German industry.
The rising carbon price is burdening people’s pockets. The price is expected to rise further in the coming years. A direct cash payout in the form of a “climate bonus” could be an instrument to ease the burden on private households.
In its coalition agreement, the outgoing German government had already promised to develop a social compensation mechanism in the form of a climate bonus. However, there was initially no mechanism that would allow the state to pay citizens directly. After the Federal Constitutional Court’s ruling regarding the Climate and Transformation Fund, there was no money due to the tight budget.
This climate bonus reappears in some election programs, albeit in different forms:
The AfD and BSW want to abolish carbon pricing altogether instead of introducing a climate bonus.
Germany’s citizens would receive the climate bonus directly. At least the “key points for a technical payment mechanism” were adopted last December. It remains to be seen when the money will actually start flowing: The Left Party even wants the climate bonus to be paid out retroactively by January 1, 2025. However, the SPD only wants a socially-tiered climate bonus from 2027, when citizens will feel the costs of CO2 pricing even more due to the introduction of ETS 2. According to Nina Scheer, the SPD’s climate policy spokesperson, it could be paid out based on income, for example. The Green Party also wants to relieve the burden on low-income households. However, neither party has yet decided what the social component of the instrument should look like.
Experts also believe that a flat-rate climate bonus may conflict with EU regulations. These directives stipulate that the funds from the ETS, into which national emissions trading will be transferred from 2027, must be used either for purposes with a proven positive environmental impact or for social aspects for middle and low-income households. It is questionable whether the FDP proposal to include everyone would be compatible with EU requirements.
Almost all parties agree that the revenue from the rising carbon price should be used for the climate bonus. Presumably, this means the revenue from national emissions trading for heat and transport. Last year, it was 13 billion euros. It is unclear whether this revenue would be paid out in full or only partially. It is equally uncertain who would receive the climate bonus. A model calculation by the German Institute for Economic Research (DIW) comes up with a fixed per capita sum of 124 euros, assuming the rising carbon price leads to additional expenditure on basic living expenses and housing benefits.
Because the cost of this increased from 45 to 55 euros on January 1, 2025, and because national carbon pricing will be transferred to European emissions trading from 2027 (ETS 2), it can be assumed that its revenues will continue to increase. Theoretically, more money could then also be distributed via the climate bonus. Germany will also receive money from the EU Emissions Trading System ETS 1 – 5.5 billion EUR in 2024. Some calculations, such as those carried out by the “Forum Ökologisch-Soziale Marktwirtschaft” on behalf of Greenpeace, referred to by the Left Party, also want to pay out this money – even though it only has an indirect impact on households.
The problem: The revenue from both types of emissions trading is already earmarked. Both cash flows currently end up in the Climate and Transformation Fund (KTF) to fund the transformation of the industry and the expansion of renewables. For example, the previous German government had earmarked expenditure of around 34 billion euros for this in 2025, but this was only offset by income of 25 billion – and that was without any climate bonus. If only part of the carbon price revenues were to be paid out, there would probably only be a fraction of the climate bonus left. The Left Party is the only party to specify a figure for the planned climate bonus – 320 euros per person each year. To pay out this much money in 2024, however, even the revenue from the national carbon price and ETS 1 combined would not have been enough.
The idea of social compensation to relieve the population of the costs of the transformation has met with widespread approval across all parties. However, as the funding of the climate bonus remains unclear and the Christian Democratic Union (CDU) has little interest in directly paying out the money to citizens, it is unlikely to be implemented under a possible CDU government.
Many parties and groups call for social compensation in the form of a climate bonus. Debates on this issue also repeatedly emphasize that even a small climate payment could boost acceptance of climate action measures. However, an analysis by the think tank Zukunft Klima Sozial also concludes that a climate bonus can only be a small part of a socially just climate policy. Given the current financial situation, considerable cuts would have to be made elsewhere.
Last year, global average temperatures continuously exceeded the 1.5-degree target for the first time. Numerous media reports were already talking about the failure of the Paris Climate Agreement. In parallel, delegations at the COP29 in Baku urged to keep the 1.5-degree target alive.
The obvious discrepancy between scientific data and political slogans can cause confusion, anger, disappointment and frustration. Such emotions can undermine trust in political institutions and empower climate change deniers. People campaigning for ambitious climate policies must adapt their communication to counteract this.
The 1.5-degree target derived from the Paris Agreement refers to an average temperature rise over 20-30 years. The fact that our planet exceeded 1.5 degrees last year does not mean that we have missed the targets of the Paris Agreement – not yet.
1.5 degrees is a scientifically proven, but primarily politically imposed target. The Alliance of Small Island States (AOSIS) pushed for 1.5 degrees to be set as a “safe limit” at COP15 in Copenhagen and the subsequent UN climate conferences. In 2018, an IPCC special report raised public awareness of the target. Since then, it has become the “golden number” in politics and for many social groups, which all climate action activities are geared towards.
Such clear political goals are important. They make the abstract more tangible – climate action, for example, is geared towards not exceeding the target of 1.5 degrees of global warming. They help bridge the gap between theoretical knowledge, political intentions and political action. The 1.5-degree target also strengthens the social consensus on necessary and ethically justifiable measures.
It is also a reference point for decisions. Like a wage negotiation, where it is worth starting with the highest possible demands, an ambitious goal can steer the political discussion and political action in the right direction. Even if it is not met, the result is likely closer to the original expectation than without such an ambitious incentive.
As scientists, we therefore advocate upholding the communication of the 1.5-degree target – and speaking and writing about overshooting it in a way that helps to ensure that climate action remains paramount. Five points can help here: taking emotions seriously, clearly explaining the target, honestly highlighting the risks of exceeding it, promoting people’s self-efficacy and, above all, not abandoning hope.
Fundamentally, we must take people’s confusion, frustration or disappointment seriously. It is often a matter of first clarifying exactly what exceeding 1.5 degrees means and why the goal remains important – without dismissing the concerns of others.
An important factor: 1.5 degrees does not represent a rigid boundary between a safe and an unsafe climate. Doomsday scenarios that claim this are more likely to undermine the credibility of climate science and policy. They suggest an imminent collapse as soon as the threshold is crossed. However, the truth is that exceeding 1.5 degrees does not mean that all climate efforts have been in vain.
We have to make it clear that it’s not just the big mark that counts, but every tenth, every hundredth of a degree. The slightest progress is better than the status quo.
At the same time, we need to speak and write honestly about the risks associated with a temperature rise of more than 1.5 degrees. For example, the feasibility and safety of many overshoot scenarios, which describe a temporary overshoot of the target and a subsequent return to 1.5 degrees using negative emission technologies, are questionable. Many effects of climate change, such as species extinction, are irreversible – even if we succeed in bringing temperatures back down to 1.5 degrees.
Slogans such as “Every tenth of a degree counts” could be supplemented by descriptions that link climate action directly to future events. 1.5 degrees means ensuring a dignified life on our planet for as many people as possible. With every ton of greenhouse gases we save, we mitigate the consequences of climate change. We should focus on the levers with the greatest impact, but also take small improvements at all levels seriously.
Our communication can inspire self-efficacy and greater solidarity among people: If all small steps count, it also means that every single person’s contribution is important. Saving energy, driving less or eating less meat all add up to a lot. Climate change affects us all – in one way or another – and people all over the world are working to keep the 1.5-degree limit in line with the Paris Agreement.
However, we must also give hope: Even if the planet warms more, all is not lost. The world is further along than it was ten years ago. There are many examples we can use to emphasize the gains and positive aspects of the grand transformation we are undergoing. We must continue to make every effort to stay within 1.5 degrees. But we should not give up hope if we do overshoot the target.
Charlotte Unger researches national and international climate policy processes at the Research Institute for Sustainability – Helmholtz Center Potsdam (RIFS). Janna Hoppmann is a psychologist and the founder of the consulting agency ClimateMind and the associated ClimateMind Academy. The authors would like to thank the German Climate Consortium for inspiring discussions on the 1.5 degree target.
Today, we are focusing on how we talk about the climate crisis and the measures to counter it. For instance: How much climate action can and does Germany want to afford at a time of economic recession? Sabine Nallinger from the Alliance for Climate and Economy and Holger Lösch from the Federation of German Industries discuss what they think about postponing climate targets, lowering the debt ceiling or cutting red tape.
Today’s fact-check also revolves around a hot debate in the German election campaign: What should the climate bonus payments that almost all parties have called for look like? Where could the money come from, and how could it be made EU-compatible? And finally, among many other news items, our opinion piece discusses the first time the 1.5-degree limit was exceeded last year: How should the climate scene react to the fact that global warming has barely been halted? Should the Paris Agreement target still be maintained?
Table.Briefings: Ms. Nallinger, Germany is in a recession. Companies lament high energy prices and too much bureaucracy, partly because of the Green Deal. Wouldn’t it make sense to postpone the climate targets?
Sabine Nallinger: I see climate targets as drivers of innovation. It’s about us as a global community making the economy climate-neutral. That’s what we decided in the Paris Agreement. So the question is no longer: do we want that? The question is: If we don’t do this, we will no longer be able to manufacture products in Germany for the global market. That’s why we have no choice but to get fully on board with the green transformation.
Mr. Lösch, above all, companies want planning security. The Federation of German Industries has often stressed that it supports climate action. Doesn’t it make sense to fully embrace the transformation, as Ms. Nallinger says?
Holger Lösch: If you’re wading through the deep mud, it’s better not to stop, but to look for faster and more efficient ways out. We need to bring the numerous paths that practically all companies have now taken toward transformation to a successful conclusion. The question is: In a world significantly changed by inflation, Covid, the Russian war of aggression and perhaps also the new US president, how can we restore the balance between ecological and economic needs? Is the way in which politicians want to achieve the climate targets truly the best way? I have a lot of questions about that. I don’t want to discuss if, but how – and with increasing acuity.
What needs to change? There are demands to push back the 2045 net zero target. Is that what you want?
Lösch: In the end, it’s not about individual annual figures. After the reform of European emissions trading, energy and large industrial plants will no longer be allowed to emit greenhouse gases in the EU after the early 2040s at the latest. This clearly shows that an isolated discussion about a national climate target does not achieve anything. We must find ways to reach our ambitious climate targets without losing competitiveness and without deindustrialization. We must prioritize this discussion in Europe.
What do you need then?
Lösch: The key question is: How can we combine competitiveness and net zero? The political focus has been too one-sided in recent years. China and the United States are doing a lot for the climate, but this is a side effect of their struggle for global economic supremacy. And we are sitting idly by. We complicate climate policy too much and regulate it too tightly. We are now complaining that hydrogen is not coming as hoped. But that’s quite clear: If hydrogen is regulated in such a complex way, then, naturally, no one will invest.
So what we need most is less bureaucracy?
Nallinger: That we all agree on. We need to cut bureaucracy, absolute pragmatism. When I hear how much administrative work the Green Deal, with its thousands of pages of downstream legal acts, will cause for companies, how can anyone prepare for that? But what else I think is important, Mr. Lösch, because you mentioned competitiveness: It is certainly welcome to see how often we here in Germany have taken the lead and then realized that others are slowly following suit: China is now talking about introducing emissions trading for its own economy, so the EU border adjustment is having an effect. The German steel industry has developed a green steel standard, which China is also considering now. When people criticize Europe for being overly ambitious, you can see it here: It also works that our partners take us seriously when we lead the way. We are an economic area that must be taken seriously, we have the power to establish global instruments.
We set green standards and the others follow?
Lösch: Other countries adopt our standards – and thus become competitors who gain our market share. China and the USA are providing incentives with subsidies that also lead to more climate action. In this way, they are gaining ground – a look at solar technology, wind power and electrolysis clearly shows this. This is part of a strategy to achieve global industrial supremacy. But I doubt China would implement an ETS as rigidly and consistently as we do. Nobody else in the world is pursuing climate action with a hard quantitative target and a hard deadline.
What other adjustments would you make?
Lösch: The heart of the game is: Who will invest what is necessary? This means that millions of people, institutions, companies, states, countries and cities have to make millions of decisions that add up to the billions and trillions needed. None of these decisions will be made if there is no business model. We should set goals, but leave room for how they are to be achieved. We are making a mistake if we set too restrictive content, quantity and quality targets. This prevents innovation. You could say: The Americans play soccer, they want to score a goal. And we say: Score a goal, but it has to be a bicycle kick with the left foot into the top right-hand corner.
Nallinger: There is another important lever: public finances. Achieving net zero by 2045 is a political goal. Our generation, the transformation generation, must set it in motion. It has to do this for the next two or three generations. This one generation cannot financially afford all of this. And for the necessary public investment …
The BDI estimates the cost at 280 billion euros between 2021 and 2030 …
Nallinger: … we need a debate on the debt ceiling. The private sector and society cannot make these investments on their own. There can be no taboos. The democratic forces of the center must work together and reconcile the various interests.
Mr. Lösch, should we ditch the debt ceiling in favor of climate transition investments?
Lösch: Ms. Nallinger has a very important point: The climate transition is a politically initiated transformation. The economy has been changing since it was founded, and it is constantly evolving. Otherwise, we would still be driving around with wood gas generators today. So far, however, the transformation has generally been brought about by markets, technologies and customer demands. Now we are going through a politically driven transformation with a deadline. When this is combined with politicians’ desire to control things in detail, we end up where we are today. We are fully aware that the industry will look different in many areas in 50 years’ time. However, the discussion about the debt ceiling simply falls short of the mark. We need to analyze what the government is funding now and what it will have to fund in the future. We will have to hold tough debates on this. There are new, different needs, for example in defense. These double-digit billion sums will have to be raised in the future. We have to talk about what the government should do, what it can do, where it gets the money from, and what it spends it on. We have to strike a balance between ecology, economy and social issues. This is certainly not an easy task, but it is unavoidable.
So we get rid of the debt ceiling?
Lösch: We firmly oppose the idea of abolishing the debt ceiling across the board. A robust national budget is very valuable. We need to prioritize. We need to make things more efficient and simpler. We need to offer better incentives and framework conditions for investment. However, we may also have to talk about very clearly defined special funds for key investment tasks, as a generational task.
In the election campaign, there is a lot of talk that climate policy drives the deindustrialization of Germany. Do you agree with this?
Lösch: Yes, I see the danger. It’s already happening. Deindustrialization means that the share of industry in GDP is falling significantly. This process has been going on for several years and has recently accelerated. But the phenomenon has many causes. Germany as a business hub has deteriorated across the board. We have problems with demographics, digitalization, but also with the design of our green transformation. Our approach to implementing climate action is not the only cause of our problems. Many, but not all, of Germany’s problems are home-made. Not all of them are the result of the last three years.
Nallinger: We must honestly discuss deindustrialization and talk about which processes will no longer exist in Germany in the future. Take ammonia production, for example, which we will most likely no longer produce here in Germany on the same scale as today.
Value chains are constantly changing. However, we cannot apodictically decide which part of the value chain we will no longer want to have in Germany from now on. This is simply not possible because different industries are closely interlinked. You can’t cut off one energy-intensive foot and let the rest run as before. Of course, things are changing. But what I strongly oppose is a government or civil society decision on what we do or don’t do in industry.
Nallinger: I’m right there with you. But there is a huge uncertainty in the economy, especially in the energy-intensive sector. Do we have a future here? Do we have the right framework conditions? Are we still welcome here at all? And that is poison for the economy. That’s why we have an investment backlog. That’s why we should have an honest discussion about what will most likely no longer exist here in the future.
The steel and automotive industries are currently facing major problems in Germany. How much of this is the fault of climate policy?
Nallinger: With steel, China’s industrial policy, which dumps its overproduction here, is clearly the main culprit. Climate policy is also not responsible for the crisis in the automotive industry. In fact, the industry and governments lacked a strategy for ramping up electromobility and its supply chains for a long time. Although the EU fleet limits set a target early on, the path to achieving it remains unclear. This is now the result.
Lösch: The direct and indirect effects of global climate policy are already impacting us: China is massively subsidizing the EV industry. Whether only one out of ten companies is left in ten years is irrelevant for China – the main thing is that this company dominates the global market. The US Inflation Reduction Act is also putting pressure on the German industry. On top of this, climate legislation in the EU is too complicated and bureaucratic. Pressure is coming from outside Europe, and progress is being slowed down from within.
Can we retain all industries in Germany? Or do some basic industries produce so cost-effectively elsewhere that they cannot be subsidized?
Lösch: I find this position fatalistic. We have highly optimized clusters of basic industries and downstream value creation in Germany. If we have to give up entire industries to achieve our climate targets, we have chosen the wrong concept. We need to take a smarter structural approach. If value creation is changing, this is a development that we should actively shape – not simply accept.
Nallinger: But we will not be able to keep every process step in the basic materials sector in Europe. We need to be honest about this, otherwise it will create economic uncertainty. The energy transition is undeniably associated with high investments, but there have always been such investments, for example in nuclear power. Now it is future investments in renewables and backup power plants. Surely, there can be a basic consensus that these investments are necessary and will help us move forward.
What do you think the next German government needs to implement quickly to achieve the climate targets and keep value creation in the country?
Lösch: Everything that makes investment and innovation easier, faster and better. Germany must become more innovative. The framework conditions for the industrial sector – including, for example, a reliable energy supply with competitive prices – simply have to improve. And we need robust protection against unfair competition.
Nallinger: The industry and economy need reliability. The political framework conditions cannot change completely after every election. We need infrastructure investment so that industry can continue to grow here. And politicians must do more to moderate conflicts – for example, when it comes to social compensation for property renovation.
Sabine Nallinger is a board member of the Alliance for Climate and Economy, a climate policy initiative founded by German company executives. Holger Lösch is Deputy Director General of the Federation of German Industries (BDI), the umbrella organization of the German industry.
The rising carbon price is burdening people’s pockets. The price is expected to rise further in the coming years. A direct cash payout in the form of a “climate bonus” could be an instrument to ease the burden on private households.
In its coalition agreement, the outgoing German government had already promised to develop a social compensation mechanism in the form of a climate bonus. However, there was initially no mechanism that would allow the state to pay citizens directly. After the Federal Constitutional Court’s ruling regarding the Climate and Transformation Fund, there was no money due to the tight budget.
This climate bonus reappears in some election programs, albeit in different forms:
The AfD and BSW want to abolish carbon pricing altogether instead of introducing a climate bonus.
Germany’s citizens would receive the climate bonus directly. At least the “key points for a technical payment mechanism” were adopted last December. It remains to be seen when the money will actually start flowing: The Left Party even wants the climate bonus to be paid out retroactively by January 1, 2025. However, the SPD only wants a socially-tiered climate bonus from 2027, when citizens will feel the costs of CO2 pricing even more due to the introduction of ETS 2. According to Nina Scheer, the SPD’s climate policy spokesperson, it could be paid out based on income, for example. The Green Party also wants to relieve the burden on low-income households. However, neither party has yet decided what the social component of the instrument should look like.
Experts also believe that a flat-rate climate bonus may conflict with EU regulations. These directives stipulate that the funds from the ETS, into which national emissions trading will be transferred from 2027, must be used either for purposes with a proven positive environmental impact or for social aspects for middle and low-income households. It is questionable whether the FDP proposal to include everyone would be compatible with EU requirements.
Almost all parties agree that the revenue from the rising carbon price should be used for the climate bonus. Presumably, this means the revenue from national emissions trading for heat and transport. Last year, it was 13 billion euros. It is unclear whether this revenue would be paid out in full or only partially. It is equally uncertain who would receive the climate bonus. A model calculation by the German Institute for Economic Research (DIW) comes up with a fixed per capita sum of 124 euros, assuming the rising carbon price leads to additional expenditure on basic living expenses and housing benefits.
Because the cost of this increased from 45 to 55 euros on January 1, 2025, and because national carbon pricing will be transferred to European emissions trading from 2027 (ETS 2), it can be assumed that its revenues will continue to increase. Theoretically, more money could then also be distributed via the climate bonus. Germany will also receive money from the EU Emissions Trading System ETS 1 – 5.5 billion EUR in 2024. Some calculations, such as those carried out by the “Forum Ökologisch-Soziale Marktwirtschaft” on behalf of Greenpeace, referred to by the Left Party, also want to pay out this money – even though it only has an indirect impact on households.
The problem: The revenue from both types of emissions trading is already earmarked. Both cash flows currently end up in the Climate and Transformation Fund (KTF) to fund the transformation of the industry and the expansion of renewables. For example, the previous German government had earmarked expenditure of around 34 billion euros for this in 2025, but this was only offset by income of 25 billion – and that was without any climate bonus. If only part of the carbon price revenues were to be paid out, there would probably only be a fraction of the climate bonus left. The Left Party is the only party to specify a figure for the planned climate bonus – 320 euros per person each year. To pay out this much money in 2024, however, even the revenue from the national carbon price and ETS 1 combined would not have been enough.
The idea of social compensation to relieve the population of the costs of the transformation has met with widespread approval across all parties. However, as the funding of the climate bonus remains unclear and the Christian Democratic Union (CDU) has little interest in directly paying out the money to citizens, it is unlikely to be implemented under a possible CDU government.
Many parties and groups call for social compensation in the form of a climate bonus. Debates on this issue also repeatedly emphasize that even a small climate payment could boost acceptance of climate action measures. However, an analysis by the think tank Zukunft Klima Sozial also concludes that a climate bonus can only be a small part of a socially just climate policy. Given the current financial situation, considerable cuts would have to be made elsewhere.
Last year, global average temperatures continuously exceeded the 1.5-degree target for the first time. Numerous media reports were already talking about the failure of the Paris Climate Agreement. In parallel, delegations at the COP29 in Baku urged to keep the 1.5-degree target alive.
The obvious discrepancy between scientific data and political slogans can cause confusion, anger, disappointment and frustration. Such emotions can undermine trust in political institutions and empower climate change deniers. People campaigning for ambitious climate policies must adapt their communication to counteract this.
The 1.5-degree target derived from the Paris Agreement refers to an average temperature rise over 20-30 years. The fact that our planet exceeded 1.5 degrees last year does not mean that we have missed the targets of the Paris Agreement – not yet.
1.5 degrees is a scientifically proven, but primarily politically imposed target. The Alliance of Small Island States (AOSIS) pushed for 1.5 degrees to be set as a “safe limit” at COP15 in Copenhagen and the subsequent UN climate conferences. In 2018, an IPCC special report raised public awareness of the target. Since then, it has become the “golden number” in politics and for many social groups, which all climate action activities are geared towards.
Such clear political goals are important. They make the abstract more tangible – climate action, for example, is geared towards not exceeding the target of 1.5 degrees of global warming. They help bridge the gap between theoretical knowledge, political intentions and political action. The 1.5-degree target also strengthens the social consensus on necessary and ethically justifiable measures.
It is also a reference point for decisions. Like a wage negotiation, where it is worth starting with the highest possible demands, an ambitious goal can steer the political discussion and political action in the right direction. Even if it is not met, the result is likely closer to the original expectation than without such an ambitious incentive.
As scientists, we therefore advocate upholding the communication of the 1.5-degree target – and speaking and writing about overshooting it in a way that helps to ensure that climate action remains paramount. Five points can help here: taking emotions seriously, clearly explaining the target, honestly highlighting the risks of exceeding it, promoting people’s self-efficacy and, above all, not abandoning hope.
Fundamentally, we must take people’s confusion, frustration or disappointment seriously. It is often a matter of first clarifying exactly what exceeding 1.5 degrees means and why the goal remains important – without dismissing the concerns of others.
An important factor: 1.5 degrees does not represent a rigid boundary between a safe and an unsafe climate. Doomsday scenarios that claim this are more likely to undermine the credibility of climate science and policy. They suggest an imminent collapse as soon as the threshold is crossed. However, the truth is that exceeding 1.5 degrees does not mean that all climate efforts have been in vain.
We have to make it clear that it’s not just the big mark that counts, but every tenth, every hundredth of a degree. The slightest progress is better than the status quo.
At the same time, we need to speak and write honestly about the risks associated with a temperature rise of more than 1.5 degrees. For example, the feasibility and safety of many overshoot scenarios, which describe a temporary overshoot of the target and a subsequent return to 1.5 degrees using negative emission technologies, are questionable. Many effects of climate change, such as species extinction, are irreversible – even if we succeed in bringing temperatures back down to 1.5 degrees.
Slogans such as “Every tenth of a degree counts” could be supplemented by descriptions that link climate action directly to future events. 1.5 degrees means ensuring a dignified life on our planet for as many people as possible. With every ton of greenhouse gases we save, we mitigate the consequences of climate change. We should focus on the levers with the greatest impact, but also take small improvements at all levels seriously.
Our communication can inspire self-efficacy and greater solidarity among people: If all small steps count, it also means that every single person’s contribution is important. Saving energy, driving less or eating less meat all add up to a lot. Climate change affects us all – in one way or another – and people all over the world are working to keep the 1.5-degree limit in line with the Paris Agreement.
However, we must also give hope: Even if the planet warms more, all is not lost. The world is further along than it was ten years ago. There are many examples we can use to emphasize the gains and positive aspects of the grand transformation we are undergoing. We must continue to make every effort to stay within 1.5 degrees. But we should not give up hope if we do overshoot the target.
Charlotte Unger researches national and international climate policy processes at the Research Institute for Sustainability – Helmholtz Center Potsdam (RIFS). Janna Hoppmann is a psychologist and the founder of the consulting agency ClimateMind and the associated ClimateMind Academy. The authors would like to thank the German Climate Consortium for inspiring discussions on the 1.5 degree target.
