Climate and Energy Policy

Climate and Energy Policy
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The Paris Agreement formulates the goal of GHG neutrality in the second half of this century and a major open issue is through which policies this goal can be realized. For that, identifying climate policy pathways and specific policy designs to ratchet up stringency is instrumental. A particularly important field of action is energy transitions, which will play a crucial role for achieving long-term climate targets. While more and more jurisdictions have already initiated or are planning such transitions, reaching the “next stage” requires going beyond established (renewable) technology policies by developing new policies that are cross-sectoral and more cost-effective. At the same time, carbon pricing policies like the EU Emission Trading Scheme (EU ETS) can still be considered in an experimental phase, and need further experimentation and reform to become the cornerstones of climate policies worldwide. To that end new research on appropriate policy mixes, choices and designs is needed.

Working Group Leader

Michael Pahle




Against this background, the group conducts dynamic analysis of policy pathways aiming to provide policy makers with actionable knowledge, i.e. about viable design options and detailed policy impacts. A particularly useful framework we employ is policy sequencing, at the core of which is identifying policy pathways that over time remove barriers (e.g. political economy) to ambitious carbon pricing. Accordingly, we mostly analyze specific policies and concrete transition challenges with a regional focus on Germany and Europe. The thematic focus so far is on policies in the electricity sectors (renewable support, RTP adoption), and the EU ETS. Yet we plan to expand our work to other sectors like industry, heating and transportation in the future (sector coupling), and potentially also the land use sector.

In addition, we conduct research on cross-cutting topics that are relevant for designing effective decarbonization policy pathways more broadly. This includes (a) comparisons of similar policies in different countries/regions to infer overarching lessons, classify policy categories and identify context-specific factors, (b) finance and financial and risk-related aspects related to energy transitions and carbon markets, and (c) more conceptual/theoretical research on topics such as policy lock-in and commitment.

The unique methodological approach of the group is to combine analytical, numerical, and empirical economic analysis with qualitative policy analysis approaches to provide high-level applied academic policy advice to real-world policy debates. A role model in that regard is Resources For The Future (RFF). A central tool is the LIMES-EU model, which entails the European power and industry sector and a very detailed representation of the EU ETS. LIMES-EU is on a good way to become one of the leading ETS models in Europe.

In line with the above described aim we primarily publish in applied economics journals (e.g. Energy Economics), high-impact interdisciplinary journals (e.g. Nature Climate Change), and policy journals (Energy Policy, Climate Policy). Furthermore, we also aspire to publish in general-interest economics journals.


Our work and tools put us into the position to be an important scientific voice that directly shapes policy making at the national and regional level. To that end we align our research with policy timelines and windows of opportunity, e.g. upfront to the coal commission in Germany and the review of the MSR mechanism in the EU ETS in 2021. In addition, we also elevate new proposals on the agenda like we did for with the comprehensive CO2 price reform in Germany in late 2018. We make sure that our work gains due attention from decision makers by engaging in and organizing stakeholder activities such as workshops. Key to that is the network we have created (including ministry officials, associations, industry, NGOs) that we continuously update and expand through workshops, stakeholder dialogues and bilateral outreach. Furthermore, we also team up with other leading researchers in our field to ensure the flow of ideas and sufficient convening power. With regard to the general-interest research, we generate a more long-term impact by increasing the understanding of important aspects of policy making, and thus change how we think about policies altogether.

Past projects

  • 2018-2022: Intelligente Strommessung und dynamische Tarife: Konsumentscheidung, rechtliche Rahmensetzung und Wohlfahrtseffekte (BeSmart), BMBF.
  • 2018-2021: Die Zukunft fossiler Energieträger im Zuge der Treibhausgasneutralität (FFF), BMBF.
  • 2015-2018: Wissenschaftliche Unterstützung zu Fragen der Entwicklung eines Governance-Systems für den 2030 Klima- und Energierahmen, BMWi.
  • 2015-2017: Hintergrundberichte zu aktuellen Entwicklungen in der Klimapolitik auf nationaler und subnationaler Ebene in den USA und Kanada mit Schwerpunkt Emissionshandel, BMUB.
  • 2013-2017 de.zentral: Institutionally and technologically consistent energy strategies for a rather central or decentralized energy transition in Germany.