Christoph Herwartz, correspondent in the Handelsblatt office in Brussels, analyzes trends and conflicts, regulatory projects and strategic concepts from the inner workings of the EU. Because anyone who is interested in business needs to know what’s going on in Brussels. You can reach him at [email protected]
The major goal of this climate conference is important for European companies in two ways. From a European point of view, it is a matter of persuading other countries to do more climate protection. The more that succeeds, the better it is for the European economy.
First, it would simplify the situation on world markets for Europeans. Because the climate protection requirements in the EU make it expensive to manufacture energy-intensive products in this country. The more ambitious other states become, the more the production conditions become more similar. To put it more concretely: An aluminum manufacturer from the EU, for example, has better chances if its competitors from Asia have to pay the same electricity bill.
Second, there will be a huge sales market for European machines if other countries switch to efficient technology. European companies claim to build the most modern and efficient systems – whether for energy generation or in production. The climate projects in other countries are likely to lead to more orders, especially for German companies.
The hidden opportunity
Another topic is important for companies that is less in the public eye: It is about Article 6 of the Paris Agreement on Climate Change. It stipulates that states do not necessarily have to implement their climate protection goals themselves, but can get help from another state.
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For example, Germany could pay Chile to have a hydropower plant built there and a coal-fired power plant to be shut down. The effect on the climate would then be credited to Germany. This could make it cheaper to achieve climate neutrality, at least on paper.
The idea behind it is coherent and plausible. Why should one billion be invested in Europe when the same climate protection effect could be had in another region for half a billion? Article 6 would lead to the creation of a global market for CO2 emission rights.
Still big problems with Article 6
As with the savings targets, there would also be a twofold benefit for the European economy: The pressure to become climate-neutral as quickly as possible would decrease. In addition, sales markets for clean technology would arise worldwide.
However, there are still major problems before Article 6 can be filled with life. In the six years since the Paris Agreement was signed, there have been repeated attempts to define a framework within which international climate protection deals are possible. “Complete the Paris rulebook”; they say in Brussels. So far this has always failed.
One reason for this is its complexity: it would be difficult to imagine expanding European emissions trading across the world. But a reliable certification system is needed so that the agreed amount of CO2 is really saved – and above all, that it is not counted twice or even sold multiple times. The parties to the UN Climate Change Conference (COP) have not yet agreed on such a system.
Critics also fear that climate protection efforts in this way will bring many other problems with them, because they are implemented at the expense of the population or damage the environment – both of which are often the case with hydropower plants. There are also some other open questions.
The EU wants to work hard to finally get an agreement. Officials involved in the negotiations are optimistic. An alliance of investors and industrial companies has been lobbying for the idea for 20 years. According to their calculations, this could save the world $ 250 billion a year on climate protection.
More: “Unfortunately, other industrialized nations are lagging behind”: Von der Leyen changes the strategy of EU climate diplomacy