Düsseldorf, Berlin European solo efforts in climate protection can, according to the conviction of managers and economists, damage the economy considerably. There is a risk that “the EU and Germany will move so far away from the rest of the world that industrial competitiveness will be massively impaired,” said BASF CEO Martin Brudermüller to the Handelsblatt.
Christian Kullmann, Evonik boss and president of the industry association VCI, warns that the fight against climate change can only be won internationally. “National special routes don’t help,” Kullmann also told the Handelsblatt.
The two leading chemical managers have deliberately chosen the time for their warning: the World Climate Conference will begin next Sunday in Glasgow. The EU and especially Germany recently sharpened their climate targets significantly. Like other sectors, the European chemical industry will have to invest massively in its own decarbonisation in the coming years in order to meet the stricter CO2 requirements. In comparison, competitors from non-European countries are predominantly subject to lower climate protection standards.
In an interview with Handelsblatt, the Cologne behavioral economist Axel Ockenfels also criticized the EU’s rushing ahead as counterproductive: “If you go to the next world climate conference and declare that the climate goals have already been set regardless of the behavior of other countries, you give up negotiating power.”
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For years, Ockenfels has been dealing with the question of how climate protection goals can be implemented globally. He is convinced that it is important that other countries and regions also set binding targets. “With some signals, you get the impression that it’s about who can present themselves as the best in the climate at home. I miss signals that motivate other countries to participate, ”said Ockenfels.
The EU and especially Germany had recently tightened their goals significantly. At the end of 2020, the heads of state and government of the EU decided to increase the European CO2 reduction target for 2030 from 40 percent to 55 percent compared to 1990.
Germany then went one step further. In May 2021, under the impression of a groundbreaking decision by the Federal Constitutional Court in the spring, the grand coalition tightened the Climate Protection Act passed in 2019. The greenhouse gas reduction target for 2030 has been raised from 55 to 65 percent. At the same time, the coalition brought forward the goal of climate neutrality for the entire economy by five years from 2050 to 2045. Germany is thus treading a special path that is unprecedented anywhere in the world.
How and whether the goal of climate neutrality can be achieved by 2045 is largely unclear. It is undisputed that fundamental reforms and massive investments will be required in the coming years. The topic therefore plays a central role in the coalition negotiations between the SPD, the Greens and the FDP, which are entering their decisive phase these days.
Investments
860
billion euro
more investments are necessary in Germany alone in order to make faster progress towards climate neutrality by 2030. Source: BDI
The Federal Association of German Industry (BDI) and the management consultancy Boston Consulting Group (BCG) presented a study last week, according to which additional investments by the public sector and by the private sector amounting to 860 billion euros will be required in Germany by 2030 move fast enough on the path to climate neutrality.
The authors of the study point out that, in addition to massive investments, fundamental changes in planning and approval law are required in order to accelerate the expansion of renewable energies. They also believe that companies need comprehensive protection so that they can cope with the transformation process.
At the center of the considerations are, in addition to relieving the electricity price, in particular contracts for differences, known in technical jargon as Carbon Contracts for Difference (CCfD). The public sector undertakes to undertake to companies to bear the additional costs compared to investments in conventional technology when investing in new, climate-neutral processes. In addition, the difference contracts would have to replace the additional costs of ongoing operations over the years, according to the study.
Great lever for reducing emissions
BASF boss Brudermüller thinks such constructions are indispensable. The EU Commission and the new federal government should “concentrate on pragmatic framework conditions with all their might,” he said. “It’s always good to be ambitious, but dreaming doesn’t help.”
Brudermüller and Evonik boss Kullmann welcome initiatives to found “climate clubs” from like-minded countries or regions. “To make this a success, it has to be a club from many important countries. The new federal government should use Germany’s G7 presidency in the coming year for a corresponding initiative, ”said Brudermüller.
Kullmann added: “That is one of the tasks that the EU Commission and the coming federal government will have to tackle.” If it were possible to achieve uniform CO2 pricing in the future, “it would be a great lever for reducing emissions worldwide “Said the Evonik boss.
Brudermüller and Evonik are opposed to the EU Commission’s proposal to compensate for the competitive disadvantage compared to countries with less high CO2 reduction targets with the help of a protective tariff called “CO2 border adjustment”. “Countermeasures from other countries would be very likely if a border adjustment were introduced. Climate protectionism harms climate protection and endangers jobs and growth opportunities, ”said Kullmann. Brudermüller warned that the system of a CO2 border adjustment “invites you to relocate industries”.
Rather, the aim must be to promote the new technologies in the start-up phase in such a way that they quickly become internationally competitive after this phase.
More: Economist Ockenfels warns: “Climate targets do not reduce CO2 emissions”