Germany COVID-19
Germany locked down at an early stage of the first wave in March 2020, which meant that it suffered fewer hospitalisations and deaths than most other countries in Western Europe. Deaths in the autumn and winter waves of the disease were lower than its peers, too. Its fiscal response to the pandemic was one of the biggest in Europe: the state paid the wages of millions of workers, keeping the formal unemployment rate below 5 per cent. Germany’s pre-existing Kurzarbeit scheme meant that it already had systems in place to pay people not to work. The state extended 100 per cent guaranteed loans to many businesses without many conditions, which meant they received the funds quickly. The IMF and the ECB forecast that Germany will reach its pre-pandemic level of output in mid-2022, but the economy is forecast to still be around 2 per cent smaller in 2024 than its prepandemic path of output.33
Greenhouse gas emissions
Germany’s total emissions had fallen by 31 per cent from their 1990 level by 2018, and reached the 2020 target of a 40 per cent reduction thanks to the COVID-19 pandemic.34 The country’s performance is only a little
better than the EU average: Chart 8 shows how rapidly Germany has cut emissions from six sectors of the economy compared to the average pace of cuts in the EU (the dotted line on the chart). Perhaps surprisingly for a country which does not impose speed limits on its motorways, Germany has reduced emissions from the transport sector faster than the EU average, and it has been among the best performers in reduced emissions from residential buildings. But its efforts in energy generation (after the decision to close down its nuclear power plants), and manufacturing and construction have been worse than the EU average. In the 1990s, reunification helped to reduce pollution from the manufacturing, construction, agriculture and energy generation sectors rapidly, as communist-era plants and machinery in the eastern Länder were decommissioned. But since the mid-2000s sectoral emissions have not improved (agriculture) or have risen (manufacturing and construction). The energy generation sector made significant gains only from 2014, despite feed-in tariffs for renewable energy being introduced in 1998.
Chart 8: Germany’s greenhouse gas emissions reductions compared to the EU average, 1990-2018 Agriculture Energy industries Industrial processes Manufacturing & construction Transport Residential Germany's emissions cuts as a share of EU emissions cuts, EU=100
130
120
110
100
90
80 70
60
50 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: CER analysis of OECD data.
33: ‘World economic outlook’, International Monetary Fund, April 2021; ‘ECB staff macroeconomic projections for the euro area’, European Central Bank, September 9th 2021; and Reza Moghadam and others, ‘Scarring in Europe’, SUERF, March 2021.
34: ‘Germany’s greenhouse gas emissions and energy transition targets’, Clean Energy Wire, August 16th 2021.
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