Altmaier Proposal

German Economy Minister Peter Altmaier just published a short paper on climate change policy. His portfolio includes energy, so he does have some influence in these matters.

I used to blog about him when he was Environment Minister in 2012 and estimated the cost of the feed-in tariff system as one trillion Euro until 2040 to justify a proposal for stepping on the brakes. So for the old times, here are some observations on that new paper.

I agree completely with the basic idea that climate hawks and industry need to work together. My most basic idea on this blog (phaseout profit theory) asks for exactly that. Work with the fossil fuel industry. Make that happen by getting to higher prices with less production.

I also think the idea of a “Clean Products Made in Germany” label might have some merit. I recall that the “Made in Germany” label was intended to reduce sales of the products it was attached too, making sure that consumers know they are buying from another country.

But that proposed label seems a bit long and complicated. And why should consumers care about the country? I for one care about CO2 emissions, not where some piece of green steel was made. Why not just have a world wide label like “Green”, with variants like “Green Steel”? Altmaier later recommends more world wide coordination, so that would fit better.

The idea of this proposal is to get a general consensus on climate before the next election season starts next year. I am not convinced the Green party (now the major rival of the CDU, which Altmaier belongs to) are interested in having their main competitive advantage removed by this sort of thing.

I am also skeptical of the motivation of getting long-term stability in climate policy over such a mechanism.

One reason is that ambitions will have go go up, as they are doing right now with the EU adjusting its 2030 goal upwards. More and more people see the world burning and will ask for more radical measures. Long-term stability would work against more ambitious goals and for more business as usual.

And the mechanism for a democratic society to decide about these questions is voting. If the CDU loses voters to the Green party over their climate record (as well they should), the new government should not be shackled in their policy options by any consensus like the one Altmaier wants.

I think the way to get long-term stability would be to have a long-term predictable mining schedule for fossil fuels modeled on the Bitcoin mining schedule. Once that is in place, everything else just follows automatically. Don’t burn more fossil fuel than is compatible with climate goals. Don’t mine more fossil fuel than you can burn.

I am not sure how to get to a world with such a mining schedule. The German government may have a role to play there. But just like the Bitcoin model, it would need to be based on a global consensus.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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