Climate policy contributes to Europe's security

‘Climate policy is not a competing priority to defense - 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 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 in 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.

The introduction of a German speed limit on motorways would not only save around 33 million tons of CO₂ by 2030, but reduced demand for oil would also generate a security dividend of around €2 billion 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.

Eliminating the EU’s oil consumption entirely would result in an annual security dividend of €104 billion – more than the entire special fund of the German Bundeswehr from 2023.

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

‘In its own interest, the EU should impose significant taxes on oil and gas – or use other measures to reduce demand for oil and gas,’ 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 diminishes 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 action will also decline.