Behavioral psychology teaches that if drivers are shown at the side of the road how fast they are driving, they are less likely to exceed the speed limit.

The state loan development bank KfW has now set itself the goal of developing such a speed indicator for sustainable economic growth.

The result is a measure that shows how much the expected growth in the form of greenhouse gas emissions is likely to cost - a kind of "ecological price tag" for gross domestic product (GDP).

Svea Junge

Editor in Business.

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“Economic growth is not an end in itself per se.

That's why we want to create awareness of how our way of doing business has a social and ecological impact," says Fritzi Köhler-Geib, Chief Economist at KfW.

The indicator that the bank intends to publish in the future together with its economic forecast is a simple but good measure of the direction in which climate protection efforts are moving.

The direction is indeed the right one: emissions are falling – but not sharply enough to achieve the reduction targets set by politicians.

This is shown by the results that will be published on Thursday and that are exclusively available to the FAZ.

Based on the current KfW growth forecast, which predicts an increase of 1.4 percent for 2022, greenhouse gas emissions this year are expected to be 722 million tons of CO2 equivalents, around 40 million tons above the political target path.

That's 6 percent too much.

In 2023, for which KfW is forecasting a GDP drop of 0.3 percent, emissions are likely to fall further to 687 million tons of CO2 equivalents, but that would also be 35 million tons or a good 5 percent more than targeted.

"This means that we in Germany will be one Slovakia ahead of the target in each of the next two years," says Köhler-Geib.

Because the country with 5.5 million inhabitants recently emitted around 38 million tons of CO2 equivalents a year.

The calculations are based on the simplified assumption that greenhouse gas emissions are the product of the intensity of emissions per unit of GDP and the size of GDP.

In other words, with positive economic growth, emissions will only decrease if a reduction in intensity that is greater than economic growth can be realized.

In order to forecast the greenhouse gas intensity, the KfW economists use the past as a guide.

Higher emissions expected

"We have looked at the development of greenhouse gas intensity on average over the last 10 years and are continuing this trend for the future," explains Köhler-Geib.

"Of course, this means that we assume that the political and technological parameters will remain largely the same as they have been for the past 10 years," she admits.

A Russian gas supply freeze, for example, would necessitate the use of additional oil or coal-fired power plants, which could cause higher greenhouse gas emissions.

At the same time, however, GDP would in all likelihood be lower than previously assumed.

"For this scenario, too, greenhouse gas emissions are likely to exceed the political targets, but probably not as much as currently forecast," says Köhler-Geib.

Another decisive factor for greenhouse gas emissions is how mild or frosty the winter is.

But nobody can say that now.

Finally, the KfW chief economist points to the possibility that the forecast will destroy itself.

"If we succeed in using the indicator to make people more aware of the ecological costs and if this increases climate protection efforts, our forecast would be wrong," she says.

"But of course we would still be very satisfied with that." Conversely, an expected overstepping of goals could also lead to a drop in efforts.

As a consequence, the actual outcome would be worse than the forecast.

Adding additional indicators to GDP as a measure of prosperity is also on the political agenda.

Economics Minister Robert Habeck (Greens) advocated in this year's annual economic report for a stronger focus on the social and ecological consequences of economic activity.