The recent report from Kopernikus Projekte and the German Ministry of Education and Research discusses the climate policy impact of various tax expenditures and other subsidies in Germany’s transport sector. It quantifies the implicit negative CO2 prices of four key subsidies: the diesel tax privilege, the commuter allowance, the flat-rate taxation of company cars, and the kerosene tax exemption for domestic flights. The analysis shows that these subsidies result in significant negative CO2 prices, indicating a strong indirect reward for CO2 emissions compared to the CO2 price in the Fuel Emissions Trading Act (BEHG). This inconsistency undermines emission reduction efforts and disproportionately benefits high-income households. The article suggests that reforming these subsidies, especially the diesel tax privilege and company car taxation, could align price signals with climate goals and support emissions reductions, with compensation measures needed to offset consumer impacts.
Read the full report (in German): Klimaschädliche Subventionen entsprechen negativen CO2-Preisen, by Patrick Plötz, Nicolas Koch, Stefan Bach, Peter Haan, Dorothea Kistinger and Niklas Illenseer.