CLIMATE

New Economy Short Cut: Climate Policy through Price Shocks? – Prospects and Alternatives

In this upcoming Short Cut, Nina Scheer, Nils aus dem Moore, Thomas Fricke and Isabella Wedl will discus findings from the new Forum study on lessons from the Inflation Reduction Act and implications for European climate policy.

PUBLISHED

29. APRIL 2025
(c) Garrett-Butler/Unsplash

The new federal government wants to continue to significantly raise the cost of climate-damaging behavior. Yet already in 2027, a shock looms when the expansion of emissions trading to include transport and buildings is expected to cause a drastic rise in prices for fuel and heating. Can such a shock really be cushioned in a socially fair way? Are higher carbon prices at all effective in promoting climate-friendly behavior? Or would an alternative be to rely on positive incentives, as the former U.S. administration did with the Inflation Reduction Act?

In light of the publication of our Forum study „A positive approach to climate policy: What are preliminary lessons learnt from the US Inflation Reduction Act?“, we discuss all of this in our New Economy Short Cut:

Climate Policy through Price Shocks? – Prospects and Alternatives

With Isabella Wedl and Thomas Fricke, Forum New Economy,

Nils aus dem Moore, Hertie School of Governance and Christ & Company,

Nina Scheer, SPD Spokesperson for climate protection and energy policy in the Bundestag

on April 30, 2025, at 17:00 PM – via Zoom

Register here.

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KNOWLEDGE BASE

During the high point of market orthodoxy, economists argued that the most 'efficient' way to combat climate change was to simply let markets determine the price of carbon emissions. Today, there is a growing consensus that prices need to be regulated and that a carbon price on its own might not be enough.

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