Did Germany reach its 2020 climate targets thanks to the COVID-19 pandemic?

Abstract

ABSTRACT The German Federal Climate Change Act includes binding annual greenhouse gas (GHG) emission targets for the economic sectors energy, industry, buildings, transport, agriculture and waste. For sectors that fail to meet their targets, climate policy measures have to be implemented immediately. However, some sectors may only have achieved their targets thanks to the COVID-19 pandemic, while others may have missed their targets because of COVID-19. For policy making, it is therefore important to disentangle the effects of the COVID-19 pandemic from the effects of policy and other drivers on emissions. In this paper, the effects of the pandemic on GHG emissions in Germany in 2020 are estimated at the national level and at the levels of the economic sectors. Counterfactual emissions are estimated here based on autoregressive econometric models, thereby distinguishing between different factors of emissions based on decomposition analysis. The findings at the national level suggest that the COVID-19 pandemic lowered GHG emissions in 2020 in Germany by about 41 Mt CO2-eq (5.15%) compared to counterfactual emissions. Accordingly, about 58% of the reduction in emissions between 2019 and 2020 in Germany may be attributed to the pandemic. The findings at the sectoral level imply that without the COVID-19 pandemic, all sectors with the exception of the transport sector, would have met their emissions target in 2020 as set in the Federal Climate Change Act. The transport sector would have missed its emission target in 2020 without COVID-19, suggesting that existing policies were not strong enough to bend the curve of emissions trends sufficiently down. In contrast, the buildings sector failed to meet its target in 2020 because of COVID-19, prompting immediate climate policy measures in this sector. Key policy insights The COVID-19 pandemic lowered greenhouse gas (GHG) emissions in Germany in 2020 by 5.5% compared to counterfactual emissions and accounted for about 58% of total estimated reductions between 2019 and 2020. Without COVID-19, all sectors but the transport sector would have met their emissions targets. Climate policy response should take into account the effects of extraordinary events like COVID-19 suppressing GHG emissions based on counterfactual emissions because failure to implement measures early on may turn out to be costly in the medium term once the transitory emissions reductions no longer occur. Counterfactual emissions should be considered prior to crediting emissions surplus or deficit to subsequent years.