The contribution of economic instruments to achieving climate protection goals: The role of government-determined energy price components in the instrument mix

The project aims to describe, understand and evaluate the steering effect of economic climate protection instruments. The following research questions are answered:

What is the mode of action of energy carrier prices, especially with regard to the climate policy steering effect of state-determined energy and electricity price components? Which reforms of the state-determined energy and electricity price components are necessary in order to achieve climate goals in Germany? Against this background, climate-damaging subsidies and tax concessions as well as possible support instruments are also considered.

Which reform proposals regarding economic climate protection instruments are suitable, taking into account any obstacles, in order to make a significant contribution to decarbonisation and the economical and efficient use of energy via economic incentives?

How can the economic climate protection instruments in selected fields of action be meaningfully embedded in a target-consistent, efficient and socially balanced climate and energy policy instrument mix? Which reform proposals for the climate and energy policy instrument mix make sense in order to overcome specific obstacles?

How should the financing of the energy transition, including the regulatory framework, be designed with a perspective of a very high share of renewable energies (RE, with marginal costs close to zero)? In this context, the competitive disadvantages for RE and RES-E should be reduced in order to stimulate efficient generation and use of energy in all sectors.

The analysis is based on an inventory of the incentive effects of government-determined energy price components in the buildings, transport, industry, trade, commerce, services, and household sectors. In addition, models are used to perform quantitative ex-ante analyses of energy and electricity price changes. Broad reform proposals will help to address the interplay of regulatory instruments, subsidy programmes and market trends.

Both techno-economic and behavioural science perspectives are considered.