A service of the

Forum

Industrial Implications of Decarbonisation

While the US has pulled out of the Paris Climate Agreement, the European Union is stepping up its efforts to meet the terms of the accord. The EU has set climate targets in order to reduce global greenhouse gas emissions by 2050 and keep the average global temperature increase below two degrees Celsius by 2100. Increasing the share of renewable energy sources, decarbonising energy-intensive industries and reforming the energy sector are just a few of the various ways that the EU could invest in its future.

A Green Deal for Europe would help set ambitious standards and establish an investment programme in future markets while strengthening the European economy and energy security. This commitment will require efficient processes, innovative thinking and policy reforms. Our Forum authors: Tomas Wyns, Gauri Khandekar, Irina Kustova, Christian Egenhofer, Angela Köppl, Stefan Schleicher, Radu Dudău, Mihnea Cătuţi, Erik Gawel, Sebastian Strunz and Claudia Kemfert demonstrate how climate protection and a sustainable energy transition create economic opportunities and environmental benefits for Europe and beyond.

 

Editorial

ECB: Time is Ripe for a Real Strategy

Mario Draghi steered the euro safely through tumultuous times during his tenure at the European Central Bank following the financial crisis. At the beginning of a new era, it is time for the ECB to adapt a new strategy, says Peter Bofinger. The ECB is already de facto practicing an implicit inflation targeting. And while it appears to be the most promising strategy, Bofinger writes, explicit inflation targeting, in which inflation forecasts are continually compared to the ECB’s inflation target, would also help create an operational framework for monetary policy discussion.

 

Figure of the Month

Steps in the evolution of energy systems

This figure from Angela Köppl and Stefan Schleicher's forum article "Material Use: The Next Challenge to Climate Policy"  shows 4 steps in the evolution of energy systems.

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Economic Convergence

The Eastern German Growth Trap: Structural Limits to Convergence

“Thirty years after the fall of the Iron Curtain, it has become all too apparent that Eastern Germany will not catch up with Western Germany for another generation,” writes Ulrich Blum. Getting Eastern Germany up to speed will require addressing central economic woes by encouraging endogenous, as well as exogenous growth through a merger-and-acquisition strategy and through the establishment of firm headquarters.

Quote of the Month

Romania's energy system problems and it's solutions

"Not only is Romania facing some crucial energy system problems, but the proposed solutions have often been improvised and incoherent. This also raises doubts about the effectiveness of strategic planning aimed at implementing the energy transition to net-zero emissions by 2050."

from Radu Dudău and Mihnea Cătuţi’s forum article "The Decarbonisation Challenge of Southeast Europe: A Case Study of Romania".

Letter from America

Addressing Inequality: The Wealth Tax

Americans will cast the first ballots in the Democratic Primary in Iowa in January 2020. Health care, gun control and the economy have topped candidates talking points as well as Senator Elizabeth Warren’s plan for a new wealth tax. Touted by UC Berkeley economists Gabriel Zucman and Emmanuel Saez, the wealth tax may be a way to address the widening income gap and growing inequality in the US. Barry Eichengreen explains the impetus for a wealth tax, considers its possible implementation and whether or not it would be effective in this issue's Letter from America.

 

Forum

The EU Electricity Sector Will Need Reform, Again

The European Commission's proposed net-zero emissions target by 2050 as well as the new Commission President von der Leyen's ‘climate neutrality’ objective, will require a very large increase in electricity, especially for low-carbon solutions in mobility, heating and cooling and the decarbonisation of energy-intensive industries. Christian Egenhofer and Irina Kustova explain what this will entail. As electrification continues to be identified as the least expensive decarbonisation option, most analyses point to the need to double or even triple the electrification rate. At the same time, these very large volumes of low carbon electricity will need to be competitive and affordable for both industry and citizens.