Thomas Lyons 
The Organisation for Economic Co-operation and Development (OECD) has released a report calling for Germany to cut tax breaks and subsidies on cars to tackle the rise in carbon emissions in the transport industry. Germany, Europe’s largest economy, is among the top 10 emitters of carbon emissions in the world, with transport being a significant contributor. Carbon emissions from cars, trucks, ships, and planes rose to 148 million tonnes in 2022, the second consecutive increase after a pandemic-related dip. This increase is crucial in Germany’s bid to cut emissions by two-thirds by 2030, compared with 1990 levels.
The OECD report states that Germany should act “decisively” to promote environmentally friendly mobility as part of an integrated strategy. The country has a far lower taxation level than the average of the OECD’s 38 member states, and it is one of the few nations that does not levy a tax on vehicle purchase or registration. Traffic-related subsidies rose by about 35% to €65 billion in the decade through 2018. The OECD recommends abolishing tax breaks on company cars or distance allowances for commuters, as well as raising parking fees. Motorway tolls that are currently in place for trucks could also be extended to cars and light commercial vehicles. However, a recommendation for a wider use of speed limits is likely to face opposition from the pro-business FDP party, part of the governing coalition.
The report also highlights that the German economy is expected to recover more slowly next year than previously forecast as the need for spending on greener infrastructure mounts. GDP in Europe’s largest economy will increase by 0.3% in 2023 and 1.3% the following year, according to OECD projections. The report calls on Berlin to speed up its transition towards a more digital and climate-friendly economy.
The rise in carbon emissions in the transport industry is a significant issue in Germany, with emissions from cars, trucks, ships, and planes contributing to the country’s carbon footprint. The OECD report recommends that Germany take decisive action to promote environmentally friendly mobility as part of an integrated strategy. The report notes that Germany’s taxation level is far below the average of the OECD’s 38 member states, and the country is one of the few nations that does not levy a tax on vehicle purchase or registration. Traffic-related subsidies rose by about 35% to €65 billion in the decade through 2018. The OECD recommends abolishing tax breaks on company cars or distance allowances for commuters, as well as raising parking fees. Motorway tolls that are currently in place for trucks could also be extended to cars and light commercial vehicles. However, the recommendation for a wider use of speed limits is likely to face opposition from the pro-business FDP party, part of the governing coalition.
The report also highlights that the German economy is expected to recover more slowly next year than previously forecast as the need for spending on greener infrastructure mounts. GDP in Europe’s largest economy will increase by 0.3% in 2023 and 1.3% the following year, according to OECD projections. The report calls on Berlin to speed up its transition towards a more digital and climate-friendly economy.
The pandemic and energy crisis have exposed structural weaknesses in Germany’s economy, which had previously experienced dynamic export-induced growth, falling unemployment, and budget surpluses. The report notes that Germany urgently needs to accelerate its ecological and digital transformation.
In conclusion, the OECD report highlights the urgent need for Germany to take decisive action to reduce carbon emissions in the transport industry. The report recommends a range of measures, including cutting tax breaks and subsidies on cars, raising parking fees, and extending motorway tolls to cars and light commercial vehicles. The report also calls on Germany to speed up its transition towards a more digital and climate-friendly economy.
