all projects

harmful subsidies


Bertelsmann Stiftung




Forum Ökologisch-Soziale Marktwirtschaft

How harmful to the climate are state subsidies in the transport and industry sectors? And can reforms protect the climate by saving money and redistributing it more effectively?

These questions are taken from the “Reforming climate-damaging subsidies” study conducted on behalf of the Bertelsmann Stiftung. The Forum Ökologisch-Soziale Marktwirtschaft (internationally known as Green Budget Germany), worked on propositions for reform while Prognos experts calculated their respective impacts.

Contradictory subsidies should be phased out

Subsidies such as the diesel rebate damage the climate. To achieve its climate goals Germany will have to reduce both direct and indirect subsidies that promote greenhouse gas emissions.

The study shows:

  • Even if Germany does not use the saved subsidy expenditure to finance decarbonisation, the negative economic effects are very small
  • Subsidising the use of fossil fuels while at the same time trying to avoid their use via other state-funded measures, is economically unwise

Reforms can have positive ecological and financial effects

The impact estimation and modelling for industry conducted by Prognos shows that reforms can have positive ecological and fiscal impacts, while only impacting cost effects on market shares, production, and employment, to a minor extent.

The modelling in the transport sector points to a substantial dismantling of subsidies. The reform of company car taxation or the diesel tax would lead to increased income tor the state, while at the same time reducing CO2.

It should be noted that our models are unable to illustrate all action/effect mechanisms and in terms of the company car reforms, in particular, we can assume far greater effects. On the one hand, faster electrification would lead to less emissions, equally, it also leads to less additional revenues due to the decreased taxation of electric company cars.

Overall, the distribution effects of the reforms are positively assessed.

Links and downloads

Study (PDF, in German)
More on the Bertelsmann Stiftung website (in German)

Project team: Andreas Brutsche, Alex Auf der Maur, Dr Andreas Kemmler, Dr Jan Limbers

Last update: 17.11.2023

Do you have questions?

Your contact at Prognos

Jan Limbers

Senior Expert

View profile

Mehr Studien & Projekte zu diesem Thema

More studies & projects on this topic

Scenarios for calculating the cost of Germany’s transport transition

| Project

What level of investment will be required to ensure a climate-neutral transport sector by 2045? We calculated this on behalf of Agora Verkehrswende, based on three scenarios.

Energy efficiency gap analysis

| Project

Energy consumption for industry, buildings and transport has remained relatively stable for the last 20 years. A study for the German Industry Initiative for Energy Efficiency (DENEFF) shows how policy can use efficiency measures to counteract this stagnation.

Economic impact analysis for selected SDGs

| Project

A foundation group commissioned us to use KPIs to visualise the impact of its activities within identified focus SDGs.

Electricity grid expansion makes headway

| Project

For over 15 years now Prognos has been bringing together the actors concerned by the expansion of the electricity grid and facilitating dialogue between them – from the Danish to the Swiss bor-der.

Support for the Just Transition Platform

| Project

Through the Just Transition Platform (JTP), the EU supports the member states and regions in achieving their climate targets in a fair manner. Prognos provided the JTP with in-depth analyses and knowledge management.

12th Energy Transition Monitoring

| Project

The energy transition is still lagging behind its goals – such are the findings of our 12th Monitoring Report. In two of the four areas, the lights remain on red.

Annual Energy Transition Monitoring

| Project

What is the status of the energy transition in Germany? Since 2012, Prognos has been monitoring the energy transition in Bavaria and Germany on behalf of the vbw.

German energy market design

| Project

In the coming years new renewable power plants will have to be built – but also flexible gas power plants, which can be used when required. We examined various incentive instruments on behalf of the vbw.

Alternative transport scenario for Germany

| Project

Environmental organisations have tasked Prognos with adapting selected assumptions from the Federal Ministry of Transport and Digital Infrastructure transport forecasts to facilitate climate-friendly transport development.

Ex-post analysis of energy consumption in Switzerland 2022

| Project update

Final energy consumption in Switzerland for the year 2022 was around 4 percent less than in the year 2021. Mobility (32 percent) accounted for the largest share.

About us

Prognos – Providing Orientation.

Prognos is one of the oldest economic research centres in Europe. Founded at the University of Basel, Prognos experts have been conducting research for a wide range of clients from the public and private sectors since 1959 – politically independent, scientifically sound.

Learn more