DIW Economic Bulletin

European Energy and Climate Policy Requires Ambitious Targets for 2030

In January 2014, the European Commission proposed a framework for its climate and energy policy up to 2030. It includes targets for reducing greenhouse gases and using renewable energies, but no specific targets for increasing energy efficiency. By 2030, greenhouse gas emissions are to be reduced by 40 percent over 1990 figures. Another element of the proposal is the introduction of a market stability ...

Europe Needs to Further Diversify Its Gas Imports: Seven Questions to Claudia Kemfert

European Natural Gas Supply Secure Despite Political Crises

Natural gas is a significant contributor to European energy supply. Hence, the political crisis between Russia and Ukraine increases fears of the consequences of Russia suspending natural gas supplies to Ukraine and the European Union. The last time this had occurred was in the winter of 2009 when Russia and Ukraine disputed about the price of natural gas and transit costs. However, the European Union ...

Ganzes Heft

European Energy Sector: Large Investments Required for Sustainability and Supply Security

For the European Union to keep on track with its energy and climate targets, large investments are required in electricity generation, infrastructure and energy efficiency. The electricity sector takes the center stage. This article delivers an overview of several estimates of the investment requirement in the European energy sector and estimates the total required investment expenditures until 2030. ...

Weak Investment in the EU: A Long-Term Cross-Sectoral Phenomenon

Based on capital stock, in total, over six trillion euros less was invested in the European Union between 1999 and 2007 than in the non-European OECD countries, including the US, Canada, and Japan. In the euro area, investment was more than 7.5 trillion euros less than in non-European OECD countries. In virtually all EU member states, gross fixed assets (capital stock) are older than the OECD average ...

Europe’s Investment Slump: Five Questions to Claus Michelsen

Weak Investment Dampens Europe’s Growth

In the course of the economic and financial crisis, investment activity, which was not very strong to begin with, in Europe and especially the Eurozone caved in. In relation to gross domestic product, fixed capital formation declined by four percentage points since 2008. Already prior to the crisis, investment activity was rather weak in parts of the Eurozone — amongst others in Germany. This finding ...

We Need to Give Impetus to the Private Sector: Six Questions to Marcel Fratzscher

An Investment Agenda for Europe

Only strong economic growth will help Europe emerge from its crisis. The reforms implemented to date at national and European level have failed to impact the economypositively; this is due to excessive national, corporate, and private debts, the flawed banking system, the lack of structural reforms, an insufficient institutional framework at European level, as well as a persisting climate of distrust ...

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Coal Power Endangers Climate Targets: Calls for Urgent Action

Coal-fired power stations are responsible for around a third of Germany’s carbon emissions. Failure to reduce the persistently high level of coal-fired power generation threatens Germany’s climate targets for 2020 and 2050 and undermines a sustainable energy transition. Calculations by DIW Berlin and other expert opinions prove that, in the long term, lignite, in particular, is no longer relevant for ...

Pitfalls of Compound Interest Effect: Private Investors Underestimate Loss Risks of Financial Products

People are investing their life savings in financial products, for instance, to provide for their retirement, and in doing so they are making their future financial situation almost entirely dependent on the success of these investments. The financial sector promotes numerous investment opportunities with widely varying levels of risk - from the classic private pension insurance to high-risk equity ...

Unemployed Have Considerably Fewer Assets Than Ten Years Ago: Eight Questions to Markus M. Grabka

Persistently High Wealth Inequality in Germany

According to current analyses based on the Socio-Economic Panel Study (SOEP), the total net assets of German households in 2012 amounted to 6.3 trillion euros. Almost 28 percent of the adult population had no or even negative net wealth. On average, individual net assets in 2012 totaled over 83,000 euros, slightly more than ten years previously. The degree of wealth inequality also remained virtually ...

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Weak Inflation and Threat of Deflation in the Euro Area: Limits of Conventional Monetary Policy

Inflation in the euro area has been below the European Central Bank's target for almost a year now and it is also expected to remain at a very low level in the near future. On the one hand, such a low level of inflation is not in line with the ECB's objective. On the other hand, there is the risk that this situation will lead to a slide into deflation. In view of the ECB's historically low policy rates, ...

The ECB’s Policy of Low Interest Rates Is Indispensable for Now: Five Questions to Dorothea Schäfer

Low Base Interest Rates: An Opportunity in the Euro Debt Crisis

Member states of the euro area have been struggling with the legacies of the severe financial and economic crisis for four years now. But debt ratios are still rising. Negative primary balances, low growth, and low inflation do not allow for a recovery similar to the one in the US after the Second World War. Between 1946 and 1953, the US was able to almost halve its debt with no haircuts. The crisis ...

Ganzes Heft