How to Assess Investment Needs and Gaps in Relation to National Climate and Energy Policy Targets? A Manual – and a Case Study for Germany

How to assess investment needs and gaps in relation to national climate and energy targets? The report by Juergens and Rusnok Advisors addresses this central question by providing a review of existing models and studies. Investment needs assessments are relevant to make long-term investment related decisions, both for the public and private sector. This is particularly the case when market failures and public goods require policy intervention to achieve a socially optimal level and allocation of capital. Investment needs assessments produce insights that can be instrumental in evaluating, legitimizing and motivating respective choices by private and policy decision makers.

To make the best use of model outputs representing, in our case, investment needs related figures, it is important to understand their underlying drivers. Across the different studies which model Germany’s investment needs to reach climate targets in 2030 or 2050, figures range from EUR 24.9 billion to EUR 58.5 billion annually. The wide range is determined by discrepancies in scenarios, and in underlying models and assumptions. This illustrates the importance of understanding the differing frameworks in investment needs assessment studies.

Therefore, the report discusses the different rational and the analytical frameworks in the range of models that are used to analyse investment needs, their key elements and key factors, assumptions, and choices driving their results and outputs. Furthermore, presenting specific insights for Germany by exemplifying prototypes for assessing investment needs for energy efficiency investments in buildings and renewable energy investments in the energy sector.