European Cooperation Can Reduce Costs of Climate Action by EUR 248 Billion by 2050

Joint energy and climate action policy in the EU could save European countries EUR 248 billion between 2024 and 2050, with Germany alone saving EUR 66 billion. This is according to a study conducted by the ifo Institute in Munich on behalf of the Chamber of Commerce and Industry for Munich and Upper Bavaria to calculate the cost of making Europe climate neutral by 2050. “Having every country in Europe pursue energy climate action policy alone leads to huge additional costs. Joint climate action is always better than national climate action,” says Mathias Mier, ifo researcher and author of the study.

In the worst-case scenario, starting in 2031 each country in Europe carries out its own climate action without the EU with a view to becoming climate neutral by 2050. The total costs in the EU then amount to EUR 8.629 trillion. In this case, Germany incurs costs of EUR 1.882 trillion. If all countries together achieve climate neutrality for the EU by 2050, the costs drop to EUR 8.381 trillion in total and EUR 1.816 trillion for Germany. If the EU member states succeed in becoming climate neutral even faster – by 2039 – as part of the EU Emissions Trading System, the costs would be further reduced to EUR 8.310 trillion for the EU and EUR 1.800 trillion for Germany.

The study models the European electricity mix up to 2050, taking into account other sectors regulated by the EU Emissions Trading System, such as parts of industrial manufacturing, aviation, and shipping. This model is used to determine the total costs of achieving climate neutrality through the EU Emissions Trading System. The total costs from 2024 to 2050 include the electricity price, the carbon price, and subsidies.