Growth or Contraction? A Question of Decoupling

Is Germany‘s real GDP still allowed to grow in the coming years if the country wants to be climate neutral by 2045, or will the economy have to shrink? This question is a controversial issue in science and politics. However, this macroeconomic indicator is not the variable on which economic policy should be focused. Decisive for the question of whether climate neutrality is compatible with economic growth is the emissions intensity of the economy – and thus the extent to which it is possible to decouple the level of greenhouse gas emissions from the level of economic activity. The goal of economic policy should be to reduce emissions intensity sufficiently so that GDP does not have to shrink in order to become climate neutral by 2045.