Possibilities for Germany’s new coalition government regarding Climate Dividends and Universal Basic Income

by Andrew Williard

The 2021 German federal elections occurred on Sunday, October 26th with some surprising results. Current Prime Minister Angela Merkel’s party, the Christian Democrats (CDU), had the “lowest share of the result since its founding after World War II,” and the Social Democratic Party (SPD) and Green Party had an unexpectedly high voter turnout rate. With no one single party winning enough seats to form their government, the political parties are forming a coalition to achieve a governing majority. Most recently, the Green Party, SPD, and the Free Democratic Party (FDP) have completed their talks and are forming the Ampelkoalition (Traffic Light Coalition), aptly named as the three-party colors are red, yellow, and green. Analysts are expecting a left-leaning government that is in support of actively combating climate change and responding to challenges including the migration crisis, the COVID-19 pandemic, and more.

Throughout coalition talks, and moving into the newly formed coalition government, the SPD has the highest leverage in forming a coalition due to having the most seats in parliament, followed by the Green Party and then the FDP. The FDP supports a free-market approach and therefore has the least ambitious environmental goals out of these parties. But overall, with this Traffic Light Coalition, a more intensive effort towards combating climate change is expected. The Green Party supports Climate Dividends or the redistribution of revenue per capita generated from carbon taxes to reduce greenhouse gas emissions. You can read more about the Green Party’s policy in their Green Party Carbon Dividend Policy, but in essence, they agree that the “revenue generated from the CO2 Prices [should] be given back per-capita… so that climate protection is socially fair… [and] in this way, climate-friendly behavior is rewarded and there is a social balance in the system…[so that] low-income earners and families are relieved and, above all, people with high incomes are burdened.”

Carbon Cap and Dividends are also supported by the FDP, as stated on their website. The FDP agrees with the Green Party, wanting an “…emissions trading system with a strict CO2 limit, [with] a high CO2 price…which the party wants to counteract by giving money back through a so-called ‘climate dividend,’” and the FDP’s climate spokesperson told Clean Energy Wire that it is “of major importance for the FDP to have climate policy that is as cost-efficient as possible….”

Another attempt by politicians to bolster the German society and economy is the support of a universal basic income, called “Grundeinkommen”, in which the government would provide a livable stipend to all residents to promote well-being and encourage economic growth. The political party Basic Income Alliance (Bündnis Grundeinkommen) and the Green Party both support a universal basic income, and there is a three-year experiment happening in Germany right now studying the effects of a universal basic income on 120 residents who receive 1,200 Euros per month compared to a control group of almost 1,400 non-recipient residents. This experiment is in partnership with the German Institute for Economic Research in Berlin and the non-profit association Mein Grundeinkommen e.V., supported financially by private donations from over 140,000 individuals/groups. If the Traffic Light Coalition does form, there is a potential for the discussion and implementation of some form of a universal basic income, especially after the results of this government study are completed. Moreover, Linke Partei, a socialist party, is fighting to incorporate a basic income into the current coalition talks, but having only 39 seats in parliament they hold little leverage to achieve this goal.

FEASTA advocates for carbon emissions to be capped, the price increased, and then the revenues distributed to households per capita, as this is the only way to stop the increase in carbon emissions and incentivize constituents to make lower carbon purchasing decisions. According to a survey by the Federation of German Consumer Agencies, this form of government intervention is supported by 59% of German constituents. 

FEASTA is interested in connecting with groups working on these issues in Germany. Please contact us through at climate@feasta.org.


Andrew Williard is finishing up a Feasta internship, during which he researched Cap and Dividend models for eliminating fossil-fuel-derived emissions. He is a student of Environmental Economics & Policy at Appalachian State University in North Carolina, USA.

Featured images: traffic lights by FreeImages.com/Nickobec. Source: https://www.freeimages.com/search/traffic-light

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