{"id":5547,"date":"2024-12-10T12:13:18","date_gmt":"2024-12-10T11:13:18","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=5547"},"modified":"2024-12-10T12:13:18","modified_gmt":"2024-12-10T11:13:18","slug":"germanys-energy-crisis-has-benefited-right-wing-populists","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/12\/10\/germanys-energy-crisis-has-benefited-right-wing-populists\/","title":{"rendered":"Germany\u2019s Energy Crisis Has Benefited Right-Wing Populists"},"content":{"rendered":"

In the wake of Russia\u2019s invasion of Ukraine, the German government launched a substantial package of measures to mitigate the impact of rising energy costs on poorer households. However, this was not enough to maintain public support for the parties of the \u201ctraffic light coalition.\u201d Recent election results in Germany have rewarded the right-wing populist party AfD, which has consistently opposed climate policies.<\/span><\/i><\/p>\n

Can ambitious climate policy endure during challenging periods, such as when citizens face high inflation or rising energy costs? From a welfare economics perspective, the answer seems straightforward: to prevent backlash against climate policy, governments need only to compensate those experiencing losses from rising energy prices or the policies themselves. However, we believe this response overlooks critical insights from economics and political science. Sustaining support for climate policies during crises is a much more complex task than it may initially seem, even to economists.<\/span><\/p>\n

In a study conducted in Germany, we examined the effects of the sharp increase in energy prices experienced by many German households following Russia\u2019s invasion of Ukraine. The findings suggest that compensatory measures to counteract rising energy tariffs may not be enough if citizens feel the government has not done enough or lack trust in how public funds are being used.<\/span><\/p>\n

In such cases, citizens withdraw support from traditional parties and turn to right-wing populist forces. In other words, to prevent high energy prices from undermining climate policy, the government\u2019s response must be rapid, visible, and credible.<\/span><\/p>\n

Anti-Inflation Measures in Germany<\/b><\/h3>\n

Following Russia\u2019s invasion, inflation\u2014which had already been rising due to the pandemic\u2014increased across most European countries. However, rising prices did not impact all households equally. Energy expenses represent a larger portion of the budgets of lower-income households, making increases in this sector\u2019s prices particularly burdensome for them. This issue is especially severe for individuals living in rural homes built according to outdated standards and equipped with older heating systems. In Germany, these conditions are typical of families in the eastern part of the country, who, on average, were more affected by rising energy prices than those in the west.<\/span><\/p>\n

The German federal government allocated over \u20ac150 billion to shield households and businesses from the effects of rising energy costs, implementing various compensatory measures, including a one-time lump-sum transfer (Energiepreispauschale), tax reductions, and transportation subsidies. These measures mainly benefited lower-income families, as transportation, heating, and energy expenditures weigh more heavily on their budgets. However, the welfare loss for these families remained significant.<\/span><\/p>\n

The Rise of Populism<\/b><\/h3>\n

The German government\u2019s strong response to the energy crisis should have been sufficient to protect the \u201ctraffic light coalition\u201d \u2014 comprising the Social Democrats (SPD), Liberals (FDP), and Greens (B90\/Gr\u00fcne) \u2014 from repercussions. Instead, the government\u2019s popularity has notably declined over the past eighteen months, along with the electoral fortunes of the coalition parties. This was evident in the 2024 European elections and in recent regional elections in three eastern German states (Saxony, Thuringia, and Brandenburg). The decline in support for the governing parties has not translated into gains for the Christian Democrats (CDU\/CSU), whose electoral performance has remained relatively stable. Instead, the primary beneficiary of the traditional parties\u2019 struggles has been the far-right populist party Alternative f\u00fcr Deutschland (AfD).<\/span><\/p>\n

Is there a causal link between rising energy bills and the growth of far-right populism? Identifying such a link between economic hardship and political opinion is challenging, as people\u2019s political preferences are influenced by factors beyond economic conditions.<\/span><\/p>\n

Support for AfD and Inflation in Germany from 2022 to 2024<\/b><\/h4>\n
\"\"
Note: Data on the annual growth rate of the Harmonized Index of Consumer Prices (HICP) were obtained from Eurostat, while data tracking voting intentions for AfD were collected via web scraping from surveys by Insa, Ipsos, Forsa, Kantar, YouGov, Civey, GMS, Infratest dimap, Allensbach, Verian, and pollytix.<\/figcaption><\/figure>\n

The Consequences of Rising Energy Bills<\/b><\/h3>\n

Two characteristics of the German energy market enable us to analyze whether a causal link exists between the energy crisis and the rise of far-right populism: the diversification of the energy sector and the varying times at which households receive their bills.<\/span><\/p>\n

The German energy sector is highly liberalized and diversified. The largest electricity company has a 26% market share, compared to 17% in Italy and 79% in France. There are around 1,400 electricity suppliers, most of which exclusively serve small, local markets. In a liberalized market, diverse energy generation sources allow retail suppliers to adopt varied pricing, investment, and contracting strategies. Consequently, during a crisis, customers of different companies experience varied price increases.<\/span><\/p>\n

Secondly, German households receive energy bills once a year, but not all at the same time (monthly installment payments are available, however).<\/span><\/p>\n

By comparing the political preferences of individuals who have already received significantly higher bills with those who have not yet received them, we can deduce the causal relationship between energy prices and populism.<\/span><\/p>\n

In our sample, rising energy costs led to an average two-percentage-point increase in support for the far-right populist party AfD. Even more surprising is the reaction among a specific group of voters\u2014those who believe the government wastes over 50% of tax revenue: among them, the energy crisis increased AfD support by five percentage points.<\/span><\/p>\n

But the surprises do not end there: 58% of households were unaware of the German government\u2019s compensatory measures to offset rising energy prices. Therefore, in response to the crisis, it is crucial to make compensatory measures \u201cvisible.\u201d In other words, it is not enough to implement measures; it is essential that those most affected by the crisis are aware that these measures exist. How to tackle this visibility challenge through the design and communication of policies remains an open question.<\/span><\/p>\n

Implications for Climate Policy<\/b><\/h3>\n

If, initially, voter attraction to populist parties is driven more by frustration over economic issues than by ideological alignment, it is still possible that, once voters move to populist parties, their attitudes may shift to align with their new \u201cpolitical home.\u201d In our analysis, for instance, new AfD supporters\u2014those who did not feel close to this party at the beginning of 2023\u2014over time became more opposed to climate policies and less supportive of helping Ukraine defend itself against the Russian invasion. In short, they became more likely to adopt AfD\u2019s positions on climate and geopolitical issues. This brings us back to the importance of compensatory measures: once voters are lost to populist parties, winning them back may be challenging, especially if their support shifts from a protest vote to one based on shared ideologies.<\/span><\/p>\n

The price increases tied to energy costs have had far-reaching consequences, even for the implementation of measures to combat climate change.<\/span><\/p>\n

These effects may reoccur soon, as strict European climate policies will continue to impact the energy market. Various fossil fuel and carbon tax increases are anticipated, including the introduction of a second EU emissions trading system (EU-ETS 2) targeting the building and transport sectors, along with Germany\u2019s carbon tax, which will soon take effect.<\/span><\/p>\n

These policies are vital for addressing the climate crisis, but governments must remain aware of the potential political repercussions. To avoid these, they must carefully design compensatory measures that are sufficiently generous and \u201cvisible\u201d to those most affected by such policies. They must also clearly communicate how they plan to utilize revenues from climate-related taxes and contributions.<\/span><\/p>\n

In conclusion, the answer to the initial question is yes, ambitious climate policy can endure challenging times. However, it will only do so if compensatory measures for those affected are credible, effective, and communicated transparently.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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