Climate policy strengthens Europe's defense: a billion-dollar dividend!

Climate policy strengthens Europe's defense: a billion-dollar dividend!

On April 2, 2025, a new study by Joschka Wanner, an economist at the University of Würzburg, impressively explains how climate policy is of crucial importance not only ecologically, but also in terms of security policy. According to this study, which focuses on calculations of the Kiel Institute for the World Economy Ambitious climate protection measures in the EU are having a positive impact on the defense budget.

Particularly in times of crisis, climate policy is viewed as a central pillar of the European security architecture. The study quantifies the security policy added value of this policy: Every euro that Europe spends less on oil reduces Russia's war chest by 13 cents. This means that oil savings not only have an economic impact, but also lead to a reduction in European defense spending by 37 cents for every euro saved.

The role of the carbon price

A higher CO₂ price and the introduction of a speed limit in Germany could bring significant safety-related benefits. According to the study, a German speed limit by 2030 could help save 33 million tons of CO₂ and thus generate a security policy dividend of around two billion euros. Ideally, delays in CO₂ fleet limits for automobile manufacturers could even generate a dividend of around three billion euros.

If Europe stopped consuming oil completely, the annual dividend could be up to 104 billion euros. Wanner therefore recommends introducing a CO₂ price of at least 60 euros per ton for geopolitical reasons in order to strengthen the EU's security situation. A higher CO₂ price and the extension of EU emissions trading to the oil sector in buildings and transport are seen as strategically justified, especially given Russia's aggressive geopolitical situation.

The study shows clearly: Reducing emissions not only strengthens the climate, but also Europe's security. This is in direct line with the long-term objectives of European climate change policy, which aim to reduce environmentally and climate-damaging activities while mitigating the effects of climate change.

Challenges and opportunities of the energy transition

However, implementing an effective climate policy also brings challenges. Rising energy costs are forcing both companies and households to adapt their consumption behavior. This means that investments in energy-efficient devices, better thermal insulation and renewable energy must become more important. Although these measures incur initial costs, in the long term they reduce energy costs and reduce dependence on fossil fuels, such as Stuttgarter Bank LBBW highlights.

A higher carbon price has far-reaching effects on mobility, food prices and other consumer goods prices. For example, driving with combustion engines is becoming more expensive, which increases the attractiveness of alternative transport methods such as public transport or electric vehicles. In addition, the German automotive industry will be faced with the challenge of reinventing itself in order to ensure its competitiveness while demand for electromobility increases worldwide.

Given the need to transform towards a low-carbon economy, it is essential that households that invest early in sustainable solutions benefit from lower energy costs and more stable supplies. This change will not only help reduce greenhouse gas emissions, but also improve energy self-sufficiency, which is particularly desirable for security reasons.

In conclusion, European climate policy is increasingly recognized as the key to stable security and economic growth. It is an essential element to meet the challenges of climate change, reduce dependence on fossil fuels and strengthen Europe's defense capability.