The security dividend of climate policy

Timothé Beaufils, Michael Jakob, Matthias Kalkuhl, Philipp M. Richter, Daniel Spiro, Lennart Stern and Joschka Wanner

No 187, Kiel Policy Brief from Kiel Institute for the World Economy (IfW Kiel)

Abstract: • By reducing reliance on fossil fuels, EU climate policy substantially lowers Russia's financial strength, thereby limiting its military capabilities to sustain its aggression on Ukraine and beyond. • We provide estimates for the security dividend of EU climate policy. • A one-euro reduction in oil consumption in the EU results in a security dividend of 37 cents (central estimate). • Based on the security dividend alone, a significant carbon price (central estimate of 60 euros per ton of CO2) on oil consumption is justified - in addition to its climate, terms-of-trade, and local health benefits. • Ambitious EU climate policy that reduces demand for oil and natural gas should be seen as an important pillar of the European security architecture, complementing military spending, diplomatic efforts, and continued support to Ukraine.

Keywords: EU climate policy; Security dividend; Russia; Ukraine; Defense spending; Geopolitical externality; EU-Klimapolitik; Sicherheitsdividende; Russland; Ukraine; Verteidigungsausgaben; Geopolitische Externalität (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cis, nep-eec, nep-ene and nep-env
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