Six Levers for a Sustainable and Socially Equitable Green Transformation

Germany wants to achieve carbon neutrality by 2045, which requires a substantial acceleration in emission reduction. The OECD suggests six levers for a successful sustainability transformation. More comprehensive and coherent greenhouse gas pricing, involving a phase out of environmentally harmful subsidies would set better incentives to switch consumption, production and innovation to climate­friendlier products and technologies. Direct revenue refunds to households would avoid overburdening lower­income groups. Furthermore, there are a number of costly and poorly targeted subsidies for the deployment of renewables that can be reduced gradually. This would make room to offer more support for expediting development of green energy technologies and infrastructure. Workers in energy­intensive industries will need support to retrain and potentially move to other industries or places.