Berlin The idea is impressively simple and Olaf Scholz received a lot of praise for it when he propagated it almost exactly a year ago: as many countries as possible form a “climate club” together and agree on common ways to become climate-neutral by 2050.
Instead of waiting for the climate protection negotiations under the umbrella of the United Nations (UN) to lead to reliable results, which all states recognize as binding requirements, some large industrialized countries are taking matters into their own hands in the climate club.
The idea still played an important role in the final communiqué of the G7 summit at Schloss Elmau at the end of June: “We stand firmly behind the goals of an open and cooperative climate club” and will “together with partners” work towards its establishment by the end of 2022, it said .
But the most important partner is missing: China, well ahead of the USA, the world’s largest emitter of greenhouse gases, announced in the wake of the Taiwan crisis that it would suspend dialogue with the USA on climate protection. The USA, however, as the most important G7 country, is a natural member of a climate club. This in turn is keeping the Chinese from becoming a club member. However, a climate club without the largest emitter is inconceivable.
Top jobs of the day
Find the best jobs now and
be notified by email.
In addition, the recently adopted US climate package does not include a CO2 price. That too is a setback for the idea. Because the most far-reaching ideas for a climate club go so far that the members agree on a common CO2 price. But that doesn’t seem to be the case with the USA.
A disaster from an economic point of view
From the point of view of the economy, this is a disaster: “After the decisions in the USA and China, the climate club is in a coma. Whether it can be brought back to life is completely open,” said Wolfgang Große Entrup, Managing Director of the Association of the Chemical Industry (VCI), the Handelsblatt
The US economy is to become climate-friendly with billions in subsidies.
(Photo: REUTERS)
Hubertus Bardt, Managing Director of the German Economic Institute (IW), is also disappointed: “Of course, this is bad news for climate protection if multilateral negotiations get under the wheels,” he told the Handelsblatt.
“The Taiwan conflict has no factual connection to climate policy. If there is no deliberate talk and no progress here, it will do long-term damage to many countries that have nothing to do with the diplomatic conflict,” he added. The chances for a comprehensive climate club have “not increased”.
Should China permanently isolate itself in terms of climate policy, this would create its own potential for conflict. “It would be important if at least the western industrialized countries acted as one in their climate policy claims.
This is the only way to build up the pressure that could increase China’s willingness to cooperate,” said Bardt. However, there will hardly be a “big solution”, as the climate negotiations, which have lasted for around 30 years, have shown.
>> Read here: Bye-bye, climate club: Europe must prepare for the eco-tariff conflict with the USA
Christoph Bals, political director of the environmental organization Germanwatch, argues in a similar way: Bals told the Handelsblatt that climate security can only be achieved through cooperation – including with geopolitical opponents.
The question arises as to whether China is only temporarily suspending the climate talks with the USA. If there is a fundamental change in Chinese climate policy behind it, this would be self-destructive because China is severely affected, said Bals.
Solution to a European problem
However, Bals has not given up hope entirely: “If the climate club gains dynamic momentum, it can be an effective lever to move China as well. But that still requires a lot of diplomatic work with G7 and G20 partners in the coming months.”
Scholz has promoted the climate issue in the past legislative period, at the national level, but also at the G20 and G7 levels.
(Photo: IMAGO/photothek)
The climate club is seen as an efficient way to complement the difficult UN climate negotiations. Ultimately, a “club of the willing” could bring more dynamics to the world climate conference.
Olaf Scholz pushed the issue forward in the past legislative period, at national level, but also at G20 and G7 level. As early as August last year, the responsible ministries of the old federal government had agreed on a paper that essentially bears the signature of the then Finance Minister Scholz and is now used as a guideline.
The paper is six pages long and the subtitle refers to the cornerstones of “a cooperative and open climate club”. These are exactly the words that are also found in the final communiqué of the G7 summit at the end of June.
Important “target countries” of the club idea are large emitters of greenhouse gases such as China and the USA, other important trading partners of the EU, as well as countries with a large industrial sector and countries that have already introduced a CO2 price, according to the concept for the Climate club from last year.
China is the world’s largest emitter of greenhouse gases, well ahead of the United States.
(Photo: dpa)
The members of the club should vote on a “selection of climate policy instruments”. Above all, this includes creating markets for CO2-free products, pricing CO2 where possible and avoiding the exodus of industry due to CO2 costs, known in technical jargon as “carbon leakage”. In particular, it is about ensuring a level playing field in particularly energy-intensive industries.
The “Climate Club” is intended to help solve one of the fundamental problems of European climate protection policy: Because sectors such as chemicals or steel have higher CO2 costs within the EU than their competitors from other regions of the world, their products are not competitive without additional measures. In order to have a chance on the world markets, the energy-intensive industries enjoy exceptions in European emissions trading: They are allocated part of the emission certificates that they have to prove for the manufacture of their products free of charge.
Since the introduction of emissions trading, this compensation has worked more badly than well. The bottom line is that companies are left with part of the CO2 costs that do not arise in other regions of the world. In addition, the allocation of free allowances is reaching its limits because the number of allowances will be drastically reduced every year in the coming years and there are hardly any allowances left for free allocation.
This forces the affected industries to become climate-neutral. They have to switch to processes that are essentially based on the use of electricity from renewable sources and climate-neutral hydrogen. This requires high investments and also drives up the costs for ongoing operations. In the worst case, the end result is climate-neutral products that are not competitive on the world market.
In the wake of the Taiwan crisis, China announced that it would suspend dialogue with the USA on climate protection.
(Photo: AP)
The EU Commission is therefore planning to introduce a CO2 border adjustment: Products that are imported into the EU will be subject to a surcharge, the amount of which corresponds to the European CO2 costs. Countries like the USA and China take a critical view of this. They argue that a CO2 border adjustment is nothing more than protectionism and contradicts WTO rules.
Germany is one of the victims
The Climate Club aims to resolve these contradictions. If the members undertake comparable climate protection efforts, measures to protect against carbon leakage between them in the energy and industrial sectors could become superfluous. “At the same time, the members could introduce joint protection against carbon leakage to third countries,” says the Scholz paper from last year.
With China terminating the climate protection dialogue with the USA, all of this is moving into the distant future. Germany is one of the victims. After all, the export-oriented German economy is dependent on fair competitive conditions. German industry in particular, with its high CO2 costs by international comparison, had backed the climate club idea, which has now receded into the distant future.
“The suspension of cooperation does not punish the United States, it punishes the world.” John Kerry, US President Joe Biden’s special envoy on climate change
The news from China has also caused a stir in the USA. It was made clear from the outset that the climate protection dialogue with China was to be separated from other contentious issues that had to be negotiated with the Chinese, wrote John Kerry, US President Joe Biden’s special envoy for climate protection, on Twitter.
“The reason for this is simple: we are the two largest economies and the largest emitters, and the whole world will feel the consequences unless we collectively lead the way on climate change,” Kerry wrote.
And further: “The suspension of cooperation does not punish the USA, but the world.” In Germany, many are likely to share this assessment.
More: “Climate targets do not reduce CO2 emissions.”