1. There are at least 55 billion euros in biodiversity harmful subsidies in Germany that should be reduced, including subsidies for agriculture, bioenergy, housing, and transport. 2. Compensation payments of over 2 billion euros could be introduced annually for excessive use of fertilizers and pesticides. 3. Redirecting a small portion of funds from restructuring harmful subsidies could substantially increase biodiversity expenditures in Germany, which are currently only 0.6 billion euros per year.

1. Fiscal instruments for biodiversity
in Germany with a focus on
biodiversity harmful subsidies
Kai Schlegelmilch
Kail.Schlegelmilch@bmu.bund.de
Virtual Global Conference on Biodiversity Finance, 22.04.2020

2. How to identify and assess/track
biodiversity harmful subsidies?
Some guiding questions to be answered:
1. Which sectors to examine?
Start with those which have largest impact on biodiversity/on
land use, but get further inspirations from other countries and
international reports (rf. https://www.greengrowthknowledge.org/)
2. Why choose certain sectors?
Agriculture due to its high share of land use (> 50%)
Apart from land use, climate change is the largest threat to
biodiversity (hence energy and transport sectors as most fossil
fuels and greenhouse gases are caused by them)
3. Which methodologies were used?
Tax rates which are lower (either 0% or above) than regular ones
are very important indications for harmful subsidies
If payments (e.g. in the CAP) are made without any / ambitious /
targeted environmental conditions (CAP is paid just per ha.)

3. Biodiversity harmful subsidies in Germany
(in billion Euros)
Housing and Transport
e.g.Commuting lump sum income tax reduction
Tax subsidy for diesel (18 €-Cents/liter tax differential)
Agriculture and bio-energy
e.g.Direct payments of the EU Common Agricultural Policy (CAP)
Value Added Tax Reduction for animal products (meat, milk)
(Further) climate harmful subsidies in the energy sector
e.g.Many energy tax reductions for several sectors
Lower energy tax rates for most polluting fossil fuels
Total sum (at least)
8.6
13.5
33.0
55.1

4. Compensation payments for physical
impacts of non-internalised external
costs (in billion € p.a.)
For excessive use of fertilisers
•A nitrogen surplus charge should be introduced to reduce
the negative external effects of agriculture and to
compensate for them.
For excessive use of pesticides
•Based on the positive experiences in Norway and
Denmark a risk class differentiated charge should be
introduced
Revenues should be used for
•Recycling into the agricultural sector
•Targeted measures in particularly sensitive areas
•Increasing acceptance
> 1.0
1.0

5. Restructuring minor sums of biodiversity harmful
subsidies would be a substantial increase of
biodiversity expenditures
Biodiversity harmful subsidies 55 bn. €
(in 2009)
The current share of biodiversity expenditures is very small: A
substantial increase is necessary to ensure meeting all biodiversity
objectives
• Public expenditures on nature conservation is only a small amount
compared to the potential revenue from dismantling and reforming
environmentally harmful subsidies and introducing taxes on
agricultural pollutants.
• €1.4 billion a year needs to be made available for this purpose, which
is about two times of all nature conservation expenditures combined (€
0.6 billion)
• This is still a relatively modest amount compared with the potential
for dismantling subsidies and for taxes on agricultural pollution.

6. Examples for recent reforms from the climate
protection programme 2030 (adopted
20.09.2019)
The climate related aspects in this programme have mostly
indirect impacts on biodiversity via climate change, either
-positive or
-negative
1. CO2-price starts for transport and heatings/buildings at
a very low level of a fixed price for allowances of 10€/t
CO2 from 2021 (=0.03 €/l transport fuels) to 35 € in 2026
(= 0.12 €).
2. Commuting lump sum income tax deduction will be
increased from 30 Ct/km to 35 Ct/km between 2021-
2026.

7. Conclusions
1. There are at least 55 billion Euros biodiversity harmful subsidies in Germany which
should be reduced
2. Compensation payments for the excessive use of fertilisers and pesticides should be
introduced (providing more than 2 billion Euros)
3. A very minor part of such additional revenues would be sufficient for upscaling public
biodiversity expenditures substantially for meeting biodiversity objectives (1.4 billion
Euros, currently 0.6 billion Euros, gap: 0.8 billion Euros)
Lessons learned
1. Courageous politicians + persistent administrators are necessary
2. Regular monitoring and reporting such as in various governmental reports like the bi-
annual subsidy report with sustainable impact assessments (by the MoF) and correction
of subsidies are crucial
3. Using anyway ongoing political processes, particularly budget (and biodiversity and
climate) discussions and the yearly budget planning to integrate subsidy reforms
4. Form allies with potential winners of such reforms such as the MoF, but also
companies and other stakeholders
5. Use appropriate communications to support subsidy reforms
6. Targeting the current and later support measures environmentally („green recovery“) is
the chance of the crisis for the acceleration of the ecological transition. The EU green
deal and other studies point at such chances
(https://foes.de/publikationen/2020/200330_FOES_Economic_support_measures_corona_crisis.pdf)

8. Sources:
1. Federal Agency for Nature Conservation (BfN): Reduction of biodiversity
harmful subsidies and compensation payments for physical impacts – Economic
Instruments for the protection of biodiversity, (BfN, 2019, in German:
https://www.bfn.de/fileadmin/BfN/oekonomie/Dokumente/Abbau_naturschae
digender_Subventionen.pdf, English version:
https://www.bfn.de/themen/oekonomie/oekonomische-
instrumente/subventionen.html)
2. Federal Ministry of Finance (MoF, 2019, in German): Bi-annual subsidy report
with sustainable impact assessments:
https://www.bundesfinanzministerium.de/Content/DE/Downloads/Broschueren
_Bestellservice/2020-03-01-Subventionsbericht.html
In English:
https://www.bundesfinanzministerium.de/Content/EN/Standardartikel/Press_R
oom/Publications/Brochures/2020-03-03-27subsidy-report.html
3. Report from the Federal Environment Agency (UBA, 2016): Environmentally-
harmful subsidies: in German:
https://www.umweltbundesamt.de/themen/wirtschaft-konsum/wirtschaft-
umwelt/umweltschaedliche-subventionen#umweltschadliche-subventionen-in-
deutschland
in English: https://www.umweltbundesamt.de/en/environmentally-harmful-
subsidies#direct-and-indirect-subsidies