• Announcement
13. September 2022

How can economic incentives be created that promote sustainable consumption and reduce emissions and waste?

The Federal Environment Agency has published a study developing proposals for excise taxes aimed at reducing the consumption of scarce resources, reducing emissions and waste, and providing economic incentives for recycling products to recover raw materials.  

In the project, options for the taxation of products were elaborated. The subjects of consideration are an environmentally oriented value-added tax both within the existing European legal framework and possible changes to EU law; as well as excise duties and other product-related economic instruments. The report focuses on excise taxes that have the potential to reduce overconsumption of scarce resources, reduce emissions and waste, and provide economic incentives for recycling products to recover raw materials. In addition to taxes, other product-related economic instruments such as deposit systems or the expansion of producer responsibility are also addressed in the analyses.

Approaches were examined that primarily address the demand side, but indirectly also partly the supply side. The instruments create ecological improvements through different mechanisms of action:

  • steering demand and promoting sustainable consumption and production, for example by lowering the coffee tax on sustainable coffee.
  • Creating innovation incentives for manufacturers of products to reduce their ecological footprint or to develop environmentally friendly alternatives (e.g. largely climate-neutral cement, climate-friendly transport technologies for food or the replacement of single-use plastic products with reusable solutions for to-go consumption);
  • Use of economic instruments to finance measures, e.g. tax revenues for climate protection contracts or financing awareness-raising measures in the context of extended producer responsibility for single-use plastic products;
  • Linking environmental and economic policy as well as strategic goals to promote a circular economy for lithium-containing batteries through a deposit system..

You can find the results of the study here under Studies/Guidelines in the section for experts.