Clash between national and EU climate policies: The German climate levy as a remedy?

This policy brief explores the potential scope and optimal design of national climate policies in the European climate policy context. It argues that the recent German proposal of a climate levy for electricity generators (BMWi 2015) has the potential to reconcile EU and national policies. Section 2 starts with a brief introduction into the present EU climate policy regime and the rationale of national climate policies in this framework. The bottom line is that the current setting basically justifies national targets and policies only for the sectors that are not already covered by the European emissions trading scheme (EU ETS). Section 3 discusses the deficiencies of the EU ETS which is the major reason why additional national polices for the EU ETS sectors can still be justified. Section 4 focusses on how such national policies should be designed. Section 5 takes the proposed German climate level as an interesting example of a new type of national policy and discusses how it could be optimized. Section 6 summarizes and concludes.