Climate policy contributes to Europe’s security

The intellectual starting point of the scientific paper published by the Kiel Institute for the World Economy is the impact 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 falls on Russia. If European countries reduce their spending on oil by 1 euro, Russia loses about 13 cents in revenue for its state budget – compensation through increased imports by other countries is 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 defense spending. The bottom line is that every euro of oil saved by the EU means a so-called security dividend of 37 cents. The EU could then reduce its security and defense spending by this amount without losing geopolitical strength relative 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 defense.

German speed limit saves 2 billion euros in annual defense 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. For example, a German speed limit of 120 kph on German motorways and 80 kph on federal highways, which would save around 33 million tons of CO₂ by 2030, would correspondingly reduce the demand for oil and hereby generate a security dividend of around 2 billion euros annually that would not have to be spent on a defense budget.

If the EU does not grant car manufacturers additional time to meet the CO₂ fleet limits, as is currently planned, the security dividend would be around 3 billion euros annually. And eliminating the EU’s oil consumption entirely would result in an annual security dividend of 104 billion euros – more than the entire special fund of the German Bundeswehr from 2023.