Work package 2: Distributional effects of RE expansion

The expansion of renewable energies contributes in many ways to the revenue from taxes and social security payments. This work package aims to estimate the amount of taxes and social security payments which can currently be attributed to activities in the field of renewable energies. To start with, a system is developed to qualitatively assess the relevant activities and tax payments as well as a methodology to attribute these quantitatively.

Relevant activities in the field of renewable energies include in particular the manufacture of plants and components, the operation of facilities, related services and the sale and/or output and consumption of renewable energy.

From a functional perspective, the taxes and duties concerned can be divided into two groups:

• indirect taxes, which the consumer has to pay (electricity tax, energy tax, sales tax)
• direct taxes, which are related to the value-added (wage tax, income tax, corporate tax, solidarity tax, business tax)

In addition to the aforementioned taxes, social security contributions are to be included which are attributed to activities in the field of renewable energies. These include employer and employee contributions to health, nursing care, pension and unemployment insurance schemes.

In Germany, the distribution of the revenue from taxes across the regional administrative bodies (federal government, federal states, municipalities) is determined by different financial compensation mechanisms. These redistributive effects are estimated without a regional breakdown. Due to the heterogeneous design, simplifying assumptions are required when estimating the total revenue by individual tax type (particularly business tax). 

Gross effects are analysed when quantitatively attributing taxes and duties to the field of renewable energies in this work package. Aspects concerning the net effects of renewable energies expansion on the revenue from taxes and social security contributions (taking into account substitution and cost effects as well as macroeconomic knock-on effects) are described qualitatively.