Climate Policy Contributes to Europe's Security

Climate policy is a central pillar of the European security architecture, especially in times of global crises. A new report by the Kiel Institute for the World Economy, IfW Kiel for short, has now quantified the added security policy value of an ambitious EU climate policy.

According to the report, every euro that Europe spends less on oil will flush 13 cents less into the Russian war chest, thus easing the pressure on European defence spending. This could fall by 37 cents for every euro saved on oil. The calculations make it clear that a higher CO₂ price is also justified from a geopolitical perspective - a speed limit would also have a direct security-related benefit.

Climate Policy is the Strategic Complement to Defence Policy

"Climate policy is not a competing priority to defence - it is its strategic complement," says Joschka Wanner, Professor at the University of Würzburg and co-author of the Kiel Policy Brief "The Security Dividend of Climate Policy".

The calculation is based on the influence of global oil consumption on Russia's war chest. The mechanism of action unfolds as follows: Lower demand for oil in the EU lowers the global market price, and part of the loss in value affects Russia.

A Security Policy Dividend

If European countries reduce their spending on oil by one euro, Russia loses around 13 cents in revenue for its national budget, with compensation through imports from other countries already priced in. In times of war, this reduction is likely to be reflected one-to-one in Russian military spending. Lower Russian military spending in turn reduces the pressure on EU defence spending.

The bottom line is that every euro of oil saved by the EU means a so-called security policy dividend of 37 cents. The EU could then reduce its spending on security and defence by this amount without losing geopolitical strength in relation to Russia. Or, conversely, every euro saved on oil has the same added value for the EU as 37 cents in additional spending on security and defence.

German Speed Limit Saves Two Billion Euros in Defence Spending

The authors' calculations can also be used to quantify the geopolitical benefit or damage of current climate policy decisions by the EU or Germany.

The introduction of a German speed limit on motorways would not only save around 33 million tonnes of CO₂ by 2030, the lower demand for oil would also correspond to a security policy dividend of around two billion euros, which would not have to flow into a defence budget.

If the EU does not give car manufacturers more time to comply with their CO₂ fleet limits, as is currently planned, this would correspond to a security policy dividend of around three billion euros.

If the EU were to stop all its oil consumption, this would correspond to a security policy dividend of 104 billion euros - per year. More than the entire German Bundeswehr special fund from 2023.

Reducing Emissions Strengthens Europe's Security

For geopolitical reasons, the authors recommend a CO₂ price of at least around 60 euros per tonne. A higher CO₂ price would therefore be just as economically and strategically justified as the expansion of EU emissions trading to include oil in the building and transport sectors.

"The EU should levy significant taxes on oil and gas out of self-interest alone - or reduce the demand for oil and gas with other measures," says Wanner. "Reducing emissions not only protects the climate, but also strengthens Europe's security."

The authors point out in their paper that the calculations apply primarily to the current situation of a geopolitically aggressive Russia. If this aggression declines and Russia no longer invests its oil revenues in the military to the same extent as it does now, the security policy dividend of climate protection measures will also decline.

Contact

Prof. Dr Joschka Wanner, University of Würzburg, Junior Professorship for Quantitative International and Environmental Economics, T: +49 931 31-87172, joschka.wanner@uni-wuerzburg.de