Berlin Federal Transport Minister Volker Wissing plans to use massive subsidies to quickly persuade Germans to buy electric cars. This emerges from a government report in which several research institutes have evaluated the plan for an immediate climate protection programme. The report is available to the Handelsblatt.
As a result, the FDP politician plans to extend and significantly increase the planned purchase premium for pure battery electric vehicles or fuel cell cars until 2027. Anyone who buys a car with a purchase price maximum of 40,000 euros will in future receive almost double instead of 6,000 euros: 10,800 euros and therefore more than 25% of the purchase price.
Added to this is the manufacturers’ subsidy of 3,000 euros, which they should also continue to grant until 2027. For more expensive vehicles up to 60,000 euros, the minister provides for a bonus of 8,400 euros instead of the 5,000 euros promised today.
From the second half of 2023, buyers will need to scrap a combustion engine car that is at least eleven years old to qualify for full financing. The value of the scrapping bonus could be around 1500 euros. Both premiums are expected to decrease from 2025.
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Unlike Federal Economics Minister Robert Habeck (Greens), Wissing wants to continue promoting the purchase of plug-in hybrids until 2024 and not stop this year. He wants to halve the subsidy to 2250 or 1875 euros depending on the purchase price.
Electric car: a government agreement provides for the end of the purchase bonus
This decision is likely to cause problems within the coalition. According to the coalition agreement, all purchase subsidies should actually expire in 2025. It is also agreed in the coalition agreement that the subsidy should continuously decrease until then.
However, Wissing is under pressure: despite the pandemic, the transport sector missed its climate targets of three million tonnes of CO2 last year, and this year alone it has to save another six million tonnes. However, traffic is increasing year on year and emissions are increasing with it. Wissing himself stresses that he wants to enable mobility, not ban it – and hopes that climate protection minister Habeck will understand.
As stipulated by the Climate Protection Act, the Federal Environment Agency presented the emission data for 2021 in mid-March. They show whether any of the sectors – waste management, energy, buildings , industry, agriculture, transport – missed the annual climate targets for the previous year provided for by law. If this is the case, the ministers responsible must propose to the Minister for Climate Protection within four months measures with which they want to close the climate gap immediately and continue to do so in the future. A panel of experts from the research institutes Prognos, Fraunhofer ISI, Öko-Institut, Ifeu, IREES and FÖS examines whether the proposals are suitable.
Their assessment of the immediate climate protection program is available to the Handelsblatt. This is particularly depressing in the transport sector: subsidy plans for electric cars alone are expected to cost up to 73 billion euros by 2027 and therefore similar to the special fund planned by the federal government for the Bundeswehr.
Volker Wissing suggested 54 measures
Wissing introduced 53 other measures, including expensive special depreciation for e-mobiles as well as funding and research programs for climate-neutral flights or the digitalization of railways and the expansion of rail and local transport. And yet, according to experts, the climate gap will remain larger than in any other sector: despite the proposals, experts have calculated 159.5 million tonnes of CO2 for the year 2030, more than what the sector transport currently issues in one year.
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According to the expert, with the proposed measures, Minister Wissing manages to save a maximum of 112 million tons over time – and only if he receives the necessary money from the Bundestag. Budget planning currently provides only 5.9 billion to subsidize the purchase of electric cars. There are also corresponding doubts among officials of the Ministry of Climate Protection. “In any case, further measures are needed to a large extent,” the officials summed up in an assessment of the report. It is also available for the Handelsblatt.
The costs are one thing, the benefits another: according to experts, the multi-billion dollar tax subsidy for the purchase of electric cars would save four million tons a year at best. For comparison: A general speed limit would yield two million tonnes.
Unlike the ministry, experts strongly doubt that a number of the proposed measures will be as effective as expected by the ministry. We always talk about “too optimistic”.
Climate-neutral flight remains a dream
Experts do not believe that airlines will fly climate-neutral by 2030 and thus contribute to climate protection. Incidentally, this also applies to local transport. According to the ministry, the “modernization offensive” which has so far only been promised should save one million tonnes of CO2. On the other hand, experts consider it important to expand the railway in such a way that short-haul flights are no longer necessary.
Doubts also include the ministry’s assumption that in the coming year almost 60% of newly registered cars will be fully electric or fuel cell powered. Experts also do not share the hope that the purchase subsidy will encourage manufacturers to buy electric cars. Instead, the amount is “built into manufacturers’ pricing as a free rider effect.” They also doubt the usefulness of the scrapping bonus in view of the prices achievable on the second-hand market.
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The expert team also assessed the interactions between the individual measures. According to European fleet limits, car manufacturers are obliged to sell more and more climate-neutral vehicles and by 2035 only. Due to these “superimposed effects of the measures”, “one can expect a significantly lower additional reduction effect of the environmental bonus”. Concretely, this means that taxpayers use the purchase bonus to ensure that manufacturers such as BMW, Mercedes or the Volkswagen group respect their fleet limits.
It is not yet certain that the subsidy plans will become a reality. The Ministry of Climate Protection clarifies that the talks are still ongoing. “At the end of the departmental coordination, the responsible secretaries of state will agree on a global project,” said a spokesperson.
After that, countries and associations would be involved. The Expert Council for Climate Protection will also evaluate the program again. “In particular, he regards the measures that are necessary under the Federal Climate Protection Act as immediate measures for the transport and building sectors, since the legally stipulated emission levels for 2021 have been exceeded here. ” In July, the federal cabinet is expected to adopt the emergency program.
After that, the Bundestag and especially the Budget Committee will have to give their consent.
After: Municipalities against Wissing: “We are not service station operators”
This article was first published on May 6, 2022 at 3:45 p.m.