A new study from the Centre for European Economic Research (ZEW) finds that Germany could meet about one-third of its climate goals simply by ending fossil fuel subsidies—without introducing new carbon pricing policies. In 2023, Germany spent approximately €41 billion on subsidies for oil, gas, and coal, the highest amount among all EU countries. Removing these subsidies would not only cut emissions but also reduce long-term environmental and health costs. Additionally, it could increase public revenues by nearly 5% of total consumption, easing the financial pressure of the green transition.
On a global scale, fossil fuel subsidies account for 1.3% of GDP directly, with an additional 5.8% tied to hidden costs like pollution-related health issues and climate damage, totaling nearly $6 trillion annually. Critics argue that Germany’s current approach—such as using climate funds to offset gas prices—undermines progress by supporting fossil fuel use instead of discouraging it. The ZEW report emphasizes that ending subsidies offers a cost-effective, politically feasible way to reduce emissions while strengthening Germany’s fiscal health and environmental responsibility. More