Africa: Climate crisis as an economic risk + CBAM: Industry criticizes unclear rules + UER scandal: Biofuel industry demands clarification

Dear reader,

A closer look reveals just how important government rules and their correct enforcement are for climate policy: For instance, the European economy currently complains that the EU regulations on the Carbon Border Adjustment Mechanism (CBAM) are so complicated that they are almost impossible to implement. And in the scandal surrounding the possible fraud surrounding UER certificates in Germany, it is also controversial whether the authorities acted properly and in time. The companies concerned are critical of this, as we report.

We also look at the damage that the climate crisis is already causing right now: Brazil is suffering a historic drought, a new World Bank study shows extreme weather is massively impairing the educational opportunities of children in poor countries. And another study shows that many African countries already have to spend a significant share of their economic output to more or less cope with climate extremes – and how much they will have to rely on rich countries in the future. Imagine a country like Germany were to suffer comparable climate damage of 100 billion euros – every year.

Your
Bernhard Pötter

UN report: How much the climate crisis affects Africa’s economy and national budgets

Überflutungen am Tanganjikasee infolge von Starkregen — Extreme weather hits Africa particularly hard – flooding at Lake Tanganyika after heavy rain in early September.

By

Nico Beckert

Two months before the start of COP29 in Baku, at which a new climate financing system is to be adopted, new data highlights the economic impact of the climate crisis on African countries. According to a new report by the World Meteorological Organization (WMO), countries are already losing between two and five percent of their gross domestic product on average due to the consequences of climate change. Many of these countries already struggle with high debt levels and have little access to the international financial market. Moreover, African countries have hardly benefited from the oil boom of recent years, which could have reduced the burden on their budgets.

The group of African states demands significantly more financial aid from external donors for COP29. The African demand is that developed countries must mobilize 1.3 trillion US dollars annually for the new climate finance goal (NCQG) to be adopted at COP29 – a massive increase on the 100 billion dollars pledged annually to date.

‘Deadly heatwaves, heavy rainfall, floods, droughts’

According to the WMO, some African countries already have to spend almost a tenth of their GDP to combat climate extremes such as droughts, extreme rainfall and flooding. “In 2023, the continent experienced deadly heatwaves, heavy rains, floods, tropical cyclones, and prolonged droughts,” said WMO Secretary-General Celeste Saulo. This pattern of extreme weather conditions continued in 2024. According to the WMO, warming in Africa has been slightly above the global average over the past 60 years. The continent is also most vulnerable to droughts, floods and heatwaves.

The WMO forecasts that African countries will have to spend an average of two to three percent of their GDP on climate change adaptation over the next decade. In sub-Saharan Africa, this would result in adaptation costs of 30 to 50 billion dollars per year. “Up to 118 million extremely poor people (those living on less than US$ 1.90/day) will be exposed to drought, floods and extreme heat in Africa if adequate response measures are not put in place.”

Less oil revenue and debt: Government budgets under pressure

Climate change presents Africa with immense economic challenges. To make matters worse, the public budgets of many African countries are already severely strained:

25 countries in Africa are over-indebted or have a high risk of over-indebtedness, according to the African Development Bank.
In 2024, African countries will have to spend a total of 163 billion US dollars on debt servicing, compared to just 61 billion dollars in 2010.
African countries have to pay higher interest rates to sell government bonds on the international market than ever before, as a study from April shows.

Africa has also not been able to benefit as much from the oil and gas boom of recent years as non-African countries. Although the oil price is higher than it was a few years ago, the trade surpluses of Africa’s ten major oil states are lower than in 2010, according to the Financial Times. Many African countries are producing less oil than a few years ago. Nigeria, for example, produced only 1.5 million barrels per day in 2023 instead of 2.5 million in 2010. China imports 28 percent less oil from Africa (in terms of value) than it did in 2018.

New climate finance target: Africa calls for trillions

As the consequences of the climate crisis continue to become more visible and costly while the financial situation of many African countries is already very strained, Africa is likely to become even more dependent on external financial support. This is why the African Group of States is entering the negotiations on a new climate finance target (New Collective Quantified Goal, NCQG), which is to be adopted at the next climate conference in Baku (COP29), with maximum demands. The demands in detail:

Developed countries are to mobilize 1.3 trillion US dollars annually in climate financing. Pakistan is the only country calling for even more money for the NCQG, at two trillion US dollars.
The NCQG should also compensate for loss and damage caused by the climate crisis. Many other countries oppose including loss and damage in the NCQG.
Grants and concessionary financing should not increase debt any further. Observers criticize the fact that climate financing often exacerbates the debt crisis. At the interim COP in Bonn, Rebecca Thissen from Climate Action Network International (CAN) criticized that “69 percent of climate financing from the 100 billion target leads to debt,” as more than two-thirds of payments are made in the form of loans, as the OECD figures for the 100 billion target show.
Access to climate financing should be improved, for example, through simplified approval procedures. The World Bank and international financial institutions are called upon to provide more funds and simplify access.

CBAM: Unclear rules unsettle industry

Chinese steel imports to the EU, for example, are subject to CBAM reporting requirements. Every ton of CO2 emitted during production must be declared upon import.

By

Lukas Knigge

Frustration with the EU’s Carbon Border Adjustment Mechanism (CBAM) remains high even after several months of trial. Affected companies and their stakeholders continue to complain about the bureaucratic and financial overload caused by the new law. They consider the EU Commission and the national authorities obligated to better protect European companies.

CBAM officially came into force at the end of last year. Companies wishing to import cement, iron, steel, aluminum, hydrogen, fertilizers or electricity into the EU must declare the emission intensity of the product. Although a financial levy will not be imposed for almost a year and a half, severe penalties are already being imposed if the reports are incorrect or incomplete – up to 50 euros per non-reported ton of CO2. This affects not only non-European companies, but also EU companies that rely on deliveries from outside the EU.

Actual emissions data required since July

The actual idea of the CBAM is first to obtain precise information on the emission intensity of products along the supply chains. In the second step, a CO2 levy will be gradually introduced from 2026, which will be based on the carbon price of the European Emissions Trading System (ETS). The aim is for importers to eventually pay the same carbon price as European companies to protect them from carbon leakage.

However, the collection of emissions data, in particular, poses significant challenges for companies. While it was still possible during the CBAM transition phase (until June 2024) to provide default values based on publicly available data for the product and country of origin, the actual data now needs to be reported for the current quarter. Only a small proportion of emissions (20 percent) along a supply chain can still be reported using standard values for processed products.

According to Sarah Brückner, Head of the Environment and Sustainability Department at the Mechanical Engineering Industry Association (VDMA), this is a considerable challenge for plant and mechanical engineering: “The actual data is often simply unavailable, either because the suppliers do not collect the data or do not want to release it.”

Importers are liable for the accuracy of the data

The problem is that individual companies often do not have the market power to force their suppliers to carry out costly and bureaucratically complex emissions assessments – especially for small, specialized parts for which there is hardly more than one supplier. On top of this, companies usually do not have just one supplier with a single emissions value, but several suppliers with different data. The importing companies are responsible for the accuracy of their suppliers’ data and must verify it accordingly.

Brückner explains that VDMA member companies have already visited their suppliers to convince them to hand over their data for CBAM. “But even then, they cannot guarantee the accuracy of the data.”

Support from the EU Commission has yet to materialize. When asked, the Brussels authority declined to comment on the industry’s problems, merely referring to an FAQ on CBAM reporting obligations. This states that if the declaring party cannot obtain actual emissions data from the supplier and instead reports standard values, the CBAM report will be deemed incorrect or incomplete.

Brussels’ rules cause uncertainty

National CBAM authorities do have discretionary powers when assessing CBAM reports if the actual data cannot be provided – for example, the German Emissions Trading Authority (DEHSt). However, this is entirely vague: If the actual emissions cannot be reported, documents must be provided to prove “that all reasonable efforts” have been made to obtain the data.

It is unclear what exactly “all reasonable efforts” means, especially as the size of the company and the import volume of CBAM goods will be considered when assessing the report. This leaves companies with uncertainty and fear of penalties.

That’s why VDMA sustainability expert Brückner also believes national CBAM authorities have a duty. “The DEHSt can only be contacted for questions to a very limited extent.” It is hardly practicable to have to provide data when the responsible authority does not yet have the staff to answer questions about the implementation of the CBAM, Brückner says.

Because of the ongoing challenges associated with CBAM reporting, the VDMA calls for a longer transition period during which standard values can be reported. “In mechanical and plant engineering, with its often complex supply chains, switching to another supplier takes longer than in other industries and is estimated to take a year and a half on average.”

The de minimis limit is currently 150 euros

This problem could also be solved by increasing the so-called de minimis limits. This means that importers of CBAM products with a value below this limit would be exempt from reporting. Currently, the de minimis limit is 150 euros, which strictly speaking does not even exclude private individuals. “Many imports that reach this monetary value in mechanical engineering generate carbon emissions of 1 kg or less due to the high cost of very high-quality small parts and components,” says Brückner, adding that in these cases, the administrative burden for companies is disproportionate to the minimal climate impact of their imports.

The VDMA proposes a de minimis limit of at least 5,000 euros. This would exempt purchasers of tiny quantities from CBAM reporting obligations. At the same time, powerful market players who can persuade their suppliers to be more transparent would still have to collect emissions data.

Climate in Numbers: Brazil hit by record drought

Brazil is currently experiencing the worst drought since records began – the north and mid-west of the country are particularly affected. This is according to data from the Brazilian National Center for Monitoring and Early Warning of Natural Disasters (CEMADEN). The current drought began in the second half of 2023. The latest forecasts predict below-average rainfall over the next three months, further exacerbating the drought. “Droughts are getting longer and more intense,” drought expert Ana Paula Cunha from CEMADEN told Table.Briefings, adding that the drought can be clearly attributed to climate change.

The Standardized Precipitation Evapotranspiration Index (SPEI) shows the development of droughts. It measures the climatic water balance, in other words, the total precipitation minus the potential evaporation. Values from -1.5 are considered a severe drought; values from -2 are considered an extreme drought. According to the SPEI, Brazil is experiencing the worst drought since systematic records began.

Across Brazil, over 60 percent of agricultural land is affected by drought, and some regions have not had rain for more than 120 days. As Brazil’s electricity supply is heavily dependent on hydropower, the drought jeopardizes power generation in some areas. The drought also means that wildfires are spreading faster. The country is repeatedly reporting new record numbers of fires. “We also know that large-scale deforestation exacerbates droughts,” adds Cunha.

The Amazon plays a special role in this, and “Amazon Day” aims to draw attention to its current state: Around 20 percent of the original rainforest has already been destroyed. Scientists expect that a tipping point will be reached when 25 percent of the forest has been lost, turning the Amazon into a steppe in the long term. kul

Education policy: How climate change affects students worldwide

Around 404 million students were affected by school closures due to extreme weather events between January 2022 and June 2024. This is shown in a new report by the World Bank (download). The report shows that at least 81 countries had to cancel attendance classes due to floods, heatwaves, storms or other severe weather conditions. Low-income countries were hit particularly hard. On average, they lost 18 days of classes per year. In Pakistan, the figure was as high as 97 days in the one-and-a-half years examined – almost half of a typical school year. On the other hand, high-income countries only lost an average of 2.4 days of school per year.

Even when schools remain open, rising temperatures can negatively impact a child’s learning success. For Brazil, the researchers estimate that students living in the poorer half of Brazilian communities lose up to half a year of learning time. In the long term, this could lead to lower income, lower student productivity, and reinforce inequalities. Numerous other effects of climate change can also reduce young people’s learning success, such as air pollution.

Countries neglect education in their climate policy

Despite these negative effects, climate policy often plays little or no role in the education system. In a study of 14 low- and middle-income countries, the authors of the World Bank report attest that only four countries have integrated education measures more deeply into their climate policy. According to the OECD, only around 1.3 percent of climate-related bilateral development aid was allocated to the education sector in 2020.

In an online survey of 103 education policymakers from 33 low- and middle-income countries, 87 percent said that education could help students take a more active role in tackling climate change. However, only a third believe that their education system already teaches students enough about climate change.

Just around 20 US dollars per student could help

“The promising news is that there are many low-cost steps governments can take to harness education and learning for climate action while adapting education systems to climate change,” said Luis Benveniste, Global Director for Education at the World Bank. Just 18.51 US dollars per child could help to ensure that students make good learning progress despite climate change. However, low-income countries would have to increase their spending per student by around a third. The money would have to be used, for example, to lower classroom temperatures, increase distance learning opportunities and improve teacher training.

The report also shows that many young people want to acquire green skills. In a survey of 17 to 35-year-olds in Angola, Bangladesh, China, Colombia, India, Kazakhstan, Senegal and Tanzania, almost two-thirds said that their future depends on green skills. Another 60 percent think they did not learn enough about climate change at school. Anna Parrisius

UER scandal: What the industry association ‘Initiative gegen Klimabetrug’ calls for

Following allegations of fraud against the UER certificate system, the new “Initiative gegen Klimabetrug” (Initiative against Climate Fraud) from the biofuel industry has now turned to the German Federal Ministry for the Environment with demands. It accuses the Ministry of “sluggish clarification” and demands

a thorough and critical review and halt to all UER projects,
compensation for the carbon reductions not achieved by the companies involved and possible revocation of certificates that are still valid,
a tightening of UER certification criteria and a national approval procedure, and
a dialogue with the Ministry of the Environment on these industry proposals.

The accusations against “Upstream Emission Reductions” (UER) projects have been known for a year now. This process has been in place since 2018 and allows fossil fuel producers to reduce part of their carbon emissions using certificates from abroad. These certificates, mainly from China, are believed not to meet the legal requirements or even be counterfeit. The initiative claims that only one of the 69 projects is not suspicious.

Industry: 7.9 billion euros in damage, 8.8 million tons of CO2

According to the industry, the possible fraud caused 7.9 billion euros in economic damage because the price of certified biofuels had fallen due to the fraud. A total of 8.8 million tons of CO2 were emitted, which were officially reported and paid for as avoided. According to the report, the Ministry of the Environment and the Federal Environment Agency (UBA) had waited too long to clarify the situation and failed to respond adequately to proposals from the industry.

As the responsible authority, the German Environment Agency has worked intensively to investigate the cases since spring. It hired an international law firm, combed through the files internally, consulted with foreign authorities and filed charges. The UER practice was ended prematurely by the government. However, according to the authorities, the case is highly complex and convoluted – and statements and demands to companies from the authorities must be legally accurate. The results of the UBA investigation are expected soon. bpo

Geothermal energy: How Germany wants to facilitate its use

The use of geothermal energy is to be facilitated and procedures shortened. To this end, the German Federal Cabinet passed a bill on Wednesday to speed up the approval process for geothermal plants, heat pumps and heat storage facilities. According to the Ministry for Economic Affairs and Climate Action, it stipulates that approvals under mining law, which are required for many geothermal projects, must be processed within one year. For example, private individuals who operate a heat pump that uses a nearby body of water as a heat source will no longer need a permit required under water law. However, it will still be required for drilling into the ground. In addition, geothermal energy will be given more weight in the authorities’ decisions, as it will be in the overriding public interest.

Geothermal energy is expected to play an important role in Germany’s future heat supply. Small heat pumps, used to heat single or multi-family homes, are usually used via surface collectors laid at shallow depths in the garden or probes drilled up to 100 meters deep. In the future, large heat pumps that use heat from rivers and oceans or from wastewater and data centers will be increasingly used to generate district heating. In the case of very deep boreholes, geothermal heat can also be used directly, i.e., without a heat pump.

As large geothermal energy projects are associated with considerable financial risk, the German government plans to partially secure such investments. To this end, a new loan from the state-owned KfW Bank is in the works, which not only offers preferential interest conditions; the debt is also to be partially waived if the drilling shows that the project cannot be realized at the planned location due to the geological conditions. mkr

H2Mare: Offshore wind turbine produces hydrogen directly for the first time

For the first time, an offshore wind turbine has successfully produced green hydrogen without a connection to the power grid. However, the H2Mare plant – a flagship project of the Federal Ministry of Education and Research – was initially only tested on land, using two electrolysers connected to a wind turbine. In the future, green hydrogen is to be produced more cheaply as the costs for connecting to the grid are eliminated and less energy is lost. The project sponsors Siemens Gamesa, RWE, the Fraunhofer Institute and Forschungszentrum Jülich announced this on Wednesday.

The test facility is being funded by the Ministry of Education and Research and NextGenerationEU. Over the coming months, the aim is to investigate how fluctuating electricity production from wind power affects the system’s operation. The project sponsors expect that all the necessary systems could be attached directly to a platform at the wind turbine. lb

Sweden: Why the country scraps its aviation tax

Sweden will end its tax on airline tickets on July 1, 2025, in an effort to lower prices and increase the competitiveness of the Swedish airline industry. “This will lead to lower prices for travelers and rising demand, boosting the competitiveness of airlines,” said Sweden Democrats MP Linda Lindberg at a press conference on Tuesday.

Her party is an ally of a coalition of right-wing moderates led by Prime Minister Ulf Kristersson, Christian Democrats and the Liberals. Several MPs from the right-wing populist Sweden Democrats openly deny climate change. Environmental organizations criticize the government’s plan. “The government is giving up completely on climate policy,” Daniel Kihlberg, Climate Director of the Swedish Society for Nature Conservation, told the daily newspaper Aftonbladet.

The aviation tax was introduced in 2018 by the center-left governing coalition at the time. Its amount is calculated based on the duration of the flight. It was intended to reduce the climate damage caused by air traffic. rtr/lb

Data centers: This is how high emissions could rise by 2030

By 2030, the boom in data centers worldwide could generate around 2.5 billion tons of CO₂e emissions annually – around 40 percent of the USA’s current annual emissions. This is according to a new report by investment bank Morgan Stanley published on Monday. Large tech companies such as Google, Microsoft, Meta and Amazon are the main drivers of this rapid increase with their investments in artificial intelligence and cloud solutions. However, Morgan Stanley also sees opportunities for the AI boom to drive investment in decarbonization. Carbon Capture, Utilization and Storage (CCUS) and Carbon Dioxide Removal (CDR) are cited as examples. However, these technologies are still expensive and not ready for large-scale use. Their future benefits are disputed. rtr/lb/ae

Guardian: Climate lawsuit over typhoon. Last week’s landmark ruling by South Korea’s constitutional court marked a significant victory for climate action in Asia. In a unanimous decision, it found parts of South Korea’s climate law unconstitutional for failing to protect the rights of future generations and passing an excessive burden to them. The lawsuit was initiated by children and young people suffering from the effects of climate change and unable to go to school due to typhoons. Click here for the article

Reuters: Climate change puts a strain on insurance companies. Hotter summers in Canada that have sparked wildfires in tourist areas, intense hailstorms and thunderstorms with severe flooding in major cities, all likely linked to climate change, are leading to personnel shortages and potentially claims adjustment delays. Click here for the article

Newsweek: Citizens suffer from oil drilling. Üroposed oil production along Uganda’s Lake Albert has unleashed a wave of suffering for local communities, including forced displacement and violence, according to a US climate watchdog. The report highlights serious human rights violations associated with the project. It is one of two projects linked to a planned heated pipeline that will transport Uganda’s oil to the port of Tanzania. Click here for the article

CLIMATE.TABLE EDITORIAL OFFICE

Bernhard
Pötter

Alexandra
Endres

Christiane
Kühl

Lisa
Kuner

Lukas
Knigge

Malte
Kreutzfeldt

Nico
Beckert

Dear reader,

A closer look reveals just how important government rules and their correct enforcement are for climate policy: For instance, the European economy currently complains that the EU regulations on the Carbon Border Adjustment Mechanism (CBAM) are so complicated that they are almost impossible to implement. And in the scandal surrounding the possible fraud surrounding UER certificates in Germany, it is also controversial whether the authorities acted properly and in time. The companies concerned are critical of this, as we report.

We also look at the damage that the climate crisis is already causing right now: Brazil is suffering a historic drought, a new World Bank study shows extreme weather is massively impairing the educational opportunities of children in poor countries. And another study shows that many African countries already have to spend a significant share of their economic output to more or less cope with climate extremes – and how much they will have to rely on rich countries in the future. Imagine a country like Germany were to suffer comparable climate damage of 100 billion euros – every year.

Your
Bernhard Pötter

UN report: How much the climate crisis affects Africa’s economy and national budgets

By

Nico Beckert

Two months before the start of COP29 in Baku, at which a new climate financing system is to be adopted, new data highlights the economic impact of the climate crisis on African countries. According to a new report by the World Meteorological Organization (WMO), countries are already losing between two and five percent of their gross domestic product on average due to the consequences of climate change. Many of these countries already struggle with high debt levels and have little access to the international financial market. Moreover, African countries have hardly benefited from the oil boom of recent years, which could have reduced the burden on their budgets.

The group of African states demands significantly more financial aid from external donors for COP29. The African demand is that developed countries must mobilize 1.3 trillion US dollars annually for the new climate finance goal (NCQG) to be adopted at COP29 – a massive increase on the 100 billion dollars pledged annually to date.

‘Deadly heatwaves, heavy rainfall, floods, droughts’

According to the WMO, some African countries already have to spend almost a tenth of their GDP to combat climate extremes such as droughts, extreme rainfall and flooding. “In 2023, the continent experienced deadly heatwaves, heavy rains, floods, tropical cyclones, and prolonged droughts,” said WMO Secretary-General Celeste Saulo. This pattern of extreme weather conditions continued in 2024. According to the WMO, warming in Africa has been slightly above the global average over the past 60 years. The continent is also most vulnerable to droughts, floods and heatwaves.

The WMO forecasts that African countries will have to spend an average of two to three percent of their GDP on climate change adaptation over the next decade. In sub-Saharan Africa, this would result in adaptation costs of 30 to 50 billion dollars per year. “Up to 118 million extremely poor people (those living on less than US$ 1.90/day) will be exposed to drought, floods and extreme heat in Africa if adequate response measures are not put in place.”

Less oil revenue and debt: Government budgets under pressure

Climate change presents Africa with immense economic challenges. To make matters worse, the public budgets of many African countries are already severely strained:

25 countries in Africa are over-indebted or have a high risk of over-indebtedness, according to the African Development Bank.
In 2024, African countries will have to spend a total of 163 billion US dollars on debt servicing, compared to just 61 billion dollars in 2010.
African countries have to pay higher interest rates to sell government bonds on the international market than ever before, as a study from April shows.

Africa has also not been able to benefit as much from the oil and gas boom of recent years as non-African countries. Although the oil price is higher than it was a few years ago, the trade surpluses of Africa’s ten major oil states are lower than in 2010, according to the Financial Times. Many African countries are producing less oil than a few years ago. Nigeria, for example, produced only 1.5 million barrels per day in 2023 instead of 2.5 million in 2010. China imports 28 percent less oil from Africa (in terms of value) than it did in 2018.

New climate finance target: Africa calls for trillions

As the consequences of the climate crisis continue to become more visible and costly while the financial situation of many African countries is already very strained, Africa is likely to become even more dependent on external financial support. This is why the African Group of States is entering the negotiations on a new climate finance target (New Collective Quantified Goal, NCQG), which is to be adopted at the next climate conference in Baku (COP29), with maximum demands. The demands in detail:

Developed countries are to mobilize 1.3 trillion US dollars annually in climate financing. Pakistan is the only country calling for even more money for the NCQG, at two trillion US dollars.
The NCQG should also compensate for loss and damage caused by the climate crisis. Many other countries oppose including loss and damage in the NCQG.
Grants and concessionary financing should not increase debt any further. Observers criticize the fact that climate financing often exacerbates the debt crisis. At the interim COP in Bonn, Rebecca Thissen from Climate Action Network International (CAN) criticized that “69 percent of climate financing from the 100 billion target leads to debt,” as more than two-thirds of payments are made in the form of loans, as the OECD figures for the 100 billion target show.
Access to climate financing should be improved, for example, through simplified approval procedures. The World Bank and international financial institutions are called upon to provide more funds and simplify access.

CBAM: Unclear rules unsettle industry

By

Lukas Knigge

Frustration with the EU’s Carbon Border Adjustment Mechanism (CBAM) remains high even after several months of trial. Affected companies and their stakeholders continue to complain about the bureaucratic and financial overload caused by the new law. They consider the EU Commission and the national authorities obligated to better protect European companies.

CBAM officially came into force at the end of last year. Companies wishing to import cement, iron, steel, aluminum, hydrogen, fertilizers or electricity into the EU must declare the emission intensity of the product. Although a financial levy will not be imposed for almost a year and a half, severe penalties are already being imposed if the reports are incorrect or incomplete – up to 50 euros per non-reported ton of CO2. This affects not only non-European companies, but also EU companies that rely on deliveries from outside the EU.

Actual emissions data required since July

The actual idea of the CBAM is first to obtain precise information on the emission intensity of products along the supply chains. In the second step, a CO2 levy will be gradually introduced from 2026, which will be based on the carbon price of the European Emissions Trading System (ETS). The aim is for importers to eventually pay the same carbon price as European companies to protect them from carbon leakage.

However, the collection of emissions data, in particular, poses significant challenges for companies. While it was still possible during the CBAM transition phase (until June 2024) to provide default values based on publicly available data for the product and country of origin, the actual data now needs to be reported for the current quarter. Only a small proportion of emissions (20 percent) along a supply chain can still be reported using standard values for processed products.

According to Sarah Brückner, Head of the Environment and Sustainability Department at the Mechanical Engineering Industry Association (VDMA), this is a considerable challenge for plant and mechanical engineering: “The actual data is often simply unavailable, either because the suppliers do not collect the data or do not want to release it.”

Importers are liable for the accuracy of the data

The problem is that individual companies often do not have the market power to force their suppliers to carry out costly and bureaucratically complex emissions assessments – especially for small, specialized parts for which there is hardly more than one supplier. On top of this, companies usually do not have just one supplier with a single emissions value, but several suppliers with different data. The importing companies are responsible for the accuracy of their suppliers’ data and must verify it accordingly.

Brückner explains that VDMA member companies have already visited their suppliers to convince them to hand over their data for CBAM. “But even then, they cannot guarantee the accuracy of the data.”

Support from the EU Commission has yet to materialize. When asked, the Brussels authority declined to comment on the industry’s problems, merely referring to an FAQ on CBAM reporting obligations. This states that if the declaring party cannot obtain actual emissions data from the supplier and instead reports standard values, the CBAM report will be deemed incorrect or incomplete.

Brussels’ rules cause uncertainty

National CBAM authorities do have discretionary powers when assessing CBAM reports if the actual data cannot be provided – for example, the German Emissions Trading Authority (DEHSt). However, this is entirely vague: If the actual emissions cannot be reported, documents must be provided to prove “that all reasonable efforts” have been made to obtain the data.

It is unclear what exactly “all reasonable efforts” means, especially as the size of the company and the import volume of CBAM goods will be considered when assessing the report. This leaves companies with uncertainty and fear of penalties.

That’s why VDMA sustainability expert Brückner also believes national CBAM authorities have a duty. “The DEHSt can only be contacted for questions to a very limited extent.” It is hardly practicable to have to provide data when the responsible authority does not yet have the staff to answer questions about the implementation of the CBAM, Brückner says.

Because of the ongoing challenges associated with CBAM reporting, the VDMA calls for a longer transition period during which standard values can be reported. “In mechanical and plant engineering, with its often complex supply chains, switching to another supplier takes longer than in other industries and is estimated to take a year and a half on average.”

The de minimis limit is currently 150 euros

This problem could also be solved by increasing the so-called de minimis limits. This means that importers of CBAM products with a value below this limit would be exempt from reporting. Currently, the de minimis limit is 150 euros, which strictly speaking does not even exclude private individuals. “Many imports that reach this monetary value in mechanical engineering generate carbon emissions of 1 kg or less due to the high cost of very high-quality small parts and components,” says Brückner, adding that in these cases, the administrative burden for companies is disproportionate to the minimal climate impact of their imports.

The VDMA proposes a de minimis limit of at least 5,000 euros. This would exempt purchasers of tiny quantities from CBAM reporting obligations. At the same time, powerful market players who can persuade their suppliers to be more transparent would still have to collect emissions data.

Climate in Numbers: Brazil hit by record drought

Brazil is currently experiencing the worst drought since records began – the north and mid-west of the country are particularly affected. This is according to data from the Brazilian National Center for Monitoring and Early Warning of Natural Disasters (CEMADEN). The current drought began in the second half of 2023. The latest forecasts predict below-average rainfall over the next three months, further exacerbating the drought. “Droughts are getting longer and more intense,” drought expert Ana Paula Cunha from CEMADEN told Table.Briefings, adding that the drought can be clearly attributed to climate change.

The Standardized Precipitation Evapotranspiration Index (SPEI) shows the development of droughts. It measures the climatic water balance, in other words, the total precipitation minus the potential evaporation. Values from -1.5 are considered a severe drought; values from -2 are considered an extreme drought. According to the SPEI, Brazil is experiencing the worst drought since systematic records began.

Across Brazil, over 60 percent of agricultural land is affected by drought, and some regions have not had rain for more than 120 days. As Brazil’s electricity supply is heavily dependent on hydropower, the drought jeopardizes power generation in some areas. The drought also means that wildfires are spreading faster. The country is repeatedly reporting new record numbers of fires. “We also know that large-scale deforestation exacerbates droughts,” adds Cunha.

The Amazon plays a special role in this, and “Amazon Day” aims to draw attention to its current state: Around 20 percent of the original rainforest has already been destroyed. Scientists expect that a tipping point will be reached when 25 percent of the forest has been lost, turning the Amazon into a steppe in the long term. kul

Education policy: How climate change affects students worldwide

Around 404 million students were affected by school closures due to extreme weather events between January 2022 and June 2024. This is shown in a new report by the World Bank (download). The report shows that at least 81 countries had to cancel attendance classes due to floods, heatwaves, storms or other severe weather conditions. Low-income countries were hit particularly hard. On average, they lost 18 days of classes per year. In Pakistan, the figure was as high as 97 days in the one-and-a-half years examined – almost half of a typical school year. On the other hand, high-income countries only lost an average of 2.4 days of school per year.

Even when schools remain open, rising temperatures can negatively impact a child’s learning success. For Brazil, the researchers estimate that students living in the poorer half of Brazilian communities lose up to half a year of learning time. In the long term, this could lead to lower income, lower student productivity, and reinforce inequalities. Numerous other effects of climate change can also reduce young people’s learning success, such as air pollution.

Countries neglect education in their climate policy

Despite these negative effects, climate policy often plays little or no role in the education system. In a study of 14 low- and middle-income countries, the authors of the World Bank report attest that only four countries have integrated education measures more deeply into their climate policy. According to the OECD, only around 1.3 percent of climate-related bilateral development aid was allocated to the education sector in 2020.

In an online survey of 103 education policymakers from 33 low- and middle-income countries, 87 percent said that education could help students take a more active role in tackling climate change. However, only a third believe that their education system already teaches students enough about climate change.

Just around 20 US dollars per student could help

“The promising news is that there are many low-cost steps governments can take to harness education and learning for climate action while adapting education systems to climate change,” said Luis Benveniste, Global Director for Education at the World Bank. Just 18.51 US dollars per child could help to ensure that students make good learning progress despite climate change. However, low-income countries would have to increase their spending per student by around a third. The money would have to be used, for example, to lower classroom temperatures, increase distance learning opportunities and improve teacher training.

The report also shows that many young people want to acquire green skills. In a survey of 17 to 35-year-olds in Angola, Bangladesh, China, Colombia, India, Kazakhstan, Senegal and Tanzania, almost two-thirds said that their future depends on green skills. Another 60 percent think they did not learn enough about climate change at school. Anna Parrisius

UER scandal: What the industry association ‘Initiative gegen Klimabetrug’ calls for

Following allegations of fraud against the UER certificate system, the new “Initiative gegen Klimabetrug” (Initiative against Climate Fraud) from the biofuel industry has now turned to the German Federal Ministry for the Environment with demands. It accuses the Ministry of “sluggish clarification” and demands

a thorough and critical review and halt to all UER projects,
compensation for the carbon reductions not achieved by the companies involved and possible revocation of certificates that are still valid,
a tightening of UER certification criteria and a national approval procedure, and
a dialogue with the Ministry of the Environment on these industry proposals.

The accusations against “Upstream Emission Reductions” (UER) projects have been known for a year now. This process has been in place since 2018 and allows fossil fuel producers to reduce part of their carbon emissions using certificates from abroad. These certificates, mainly from China, are believed not to meet the legal requirements or even be counterfeit. The initiative claims that only one of the 69 projects is not suspicious.

Industry: 7.9 billion euros in damage, 8.8 million tons of CO2

According to the industry, the possible fraud caused 7.9 billion euros in economic damage because the price of certified biofuels had fallen due to the fraud. A total of 8.8 million tons of CO2 were emitted, which were officially reported and paid for as avoided. According to the report, the Ministry of the Environment and the Federal Environment Agency (UBA) had waited too long to clarify the situation and failed to respond adequately to proposals from the industry.

As the responsible authority, the German Environment Agency has worked intensively to investigate the cases since spring. It hired an international law firm, combed through the files internally, consulted with foreign authorities and filed charges. The UER practice was ended prematurely by the government. However, according to the authorities, the case is highly complex and convoluted – and statements and demands to companies from the authorities must be legally accurate. The results of the UBA investigation are expected soon. bpo

Geothermal energy: How Germany wants to facilitate its use

The use of geothermal energy is to be facilitated and procedures shortened. To this end, the German Federal Cabinet passed a bill on Wednesday to speed up the approval process for geothermal plants, heat pumps and heat storage facilities. According to the Ministry for Economic Affairs and Climate Action, it stipulates that approvals under mining law, which are required for many geothermal projects, must be processed within one year. For example, private individuals who operate a heat pump that uses a nearby body of water as a heat source will no longer need a permit required under water law. However, it will still be required for drilling into the ground. In addition, geothermal energy will be given more weight in the authorities’ decisions, as it will be in the overriding public interest.

Geothermal energy is expected to play an important role in Germany’s future heat supply. Small heat pumps, used to heat single or multi-family homes, are usually used via surface collectors laid at shallow depths in the garden or probes drilled up to 100 meters deep. In the future, large heat pumps that use heat from rivers and oceans or from wastewater and data centers will be increasingly used to generate district heating. In the case of very deep boreholes, geothermal heat can also be used directly, i.e., without a heat pump.

As large geothermal energy projects are associated with considerable financial risk, the German government plans to partially secure such investments. To this end, a new loan from the state-owned KfW Bank is in the works, which not only offers preferential interest conditions; the debt is also to be partially waived if the drilling shows that the project cannot be realized at the planned location due to the geological conditions. mkr

H2Mare: Offshore wind turbine produces hydrogen directly for the first time

For the first time, an offshore wind turbine has successfully produced green hydrogen without a connection to the power grid. However, the H2Mare plant – a flagship project of the Federal Ministry of Education and Research – was initially only tested on land, using two electrolysers connected to a wind turbine. In the future, green hydrogen is to be produced more cheaply as the costs for connecting to the grid are eliminated and less energy is lost. The project sponsors Siemens Gamesa, RWE, the Fraunhofer Institute and Forschungszentrum Jülich announced this on Wednesday.

The test facility is being funded by the Ministry of Education and Research and NextGenerationEU. Over the coming months, the aim is to investigate how fluctuating electricity production from wind power affects the system’s operation. The project sponsors expect that all the necessary systems could be attached directly to a platform at the wind turbine. lb

Sweden: Why the country scraps its aviation tax

Sweden will end its tax on airline tickets on July 1, 2025, in an effort to lower prices and increase the competitiveness of the Swedish airline industry. “This will lead to lower prices for travelers and rising demand, boosting the competitiveness of airlines,” said Sweden Democrats MP Linda Lindberg at a press conference on Tuesday.

Her party is an ally of a coalition of right-wing moderates led by Prime Minister Ulf Kristersson, Christian Democrats and the Liberals. Several MPs from the right-wing populist Sweden Democrats openly deny climate change. Environmental organizations criticize the government’s plan. “The government is giving up completely on climate policy,” Daniel Kihlberg, Climate Director of the Swedish Society for Nature Conservation, told the daily newspaper Aftonbladet.

The aviation tax was introduced in 2018 by the center-left governing coalition at the time. Its amount is calculated based on the duration of the flight. It was intended to reduce the climate damage caused by air traffic. rtr/lb

Data centers: This is how high emissions could rise by 2030

By 2030, the boom in data centers worldwide could generate around 2.5 billion tons of CO₂e emissions annually – around 40 percent of the USA’s current annual emissions. This is according to a new report by investment bank Morgan Stanley published on Monday. Large tech companies such as Google, Microsoft, Meta and Amazon are the main drivers of this rapid increase with their investments in artificial intelligence and cloud solutions. However, Morgan Stanley also sees opportunities for the AI boom to drive investment in decarbonization. Carbon Capture, Utilization and Storage (CCUS) and Carbon Dioxide Removal (CDR) are cited as examples. However, these technologies are still expensive and not ready for large-scale use. Their future benefits are disputed. rtr/lb/ae

Guardian: Climate lawsuit over typhoon. Last week’s landmark ruling by South Korea’s constitutional court marked a significant victory for climate action in Asia. In a unanimous decision, it found parts of South Korea’s climate law unconstitutional for failing to protect the rights of future generations and passing an excessive burden to them. The lawsuit was initiated by children and young people suffering from the effects of climate change and unable to go to school due to typhoons. Click here for the article

Reuters: Climate change puts a strain on insurance companies. Hotter summers in Canada that have sparked wildfires in tourist areas, intense hailstorms and thunderstorms with severe flooding in major cities, all likely linked to climate change, are leading to personnel shortages and potentially claims adjustment delays. Click here for the article

Newsweek: Citizens suffer from oil drilling. Üroposed oil production along Uganda’s Lake Albert has unleashed a wave of suffering for local communities, including forced displacement and violence, according to a US climate watchdog. The report highlights serious human rights violations associated with the project. It is one of two projects linked to a planned heated pipeline that will transport Uganda’s oil to the port of Tanzania. Click here for the article

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Feature

UN report: How much the climate crisis affects Africa’s economy and national budgets

‘Deadly heatwaves, heavy rainfall, floods, droughts’

Less oil revenue and debt: Government budgets under pressure

New climate finance target: Africa calls for trillions

CBAM: Unclear rules unsettle industry

Actual emissions data required since July

Importers are liable for the accuracy of the data

Brussels’ rules cause uncertainty

The de minimis limit is currently 150 euros

Events

News

Climate in Numbers: Brazil hit by record drought

Education policy: How climate change affects students worldwide

Countries neglect education in their climate policy

Just around 20 US dollars per student could help

UER scandal: What the industry association ‘Initiative gegen Klimabetrug’ calls for

Industry: 7.9 billion euros in damage, 8.8 million tons of CO2

Geothermal energy: How Germany wants to facilitate its use

H2Mare: Offshore wind turbine produces hydrogen directly for the first time

Sweden: Why the country scraps its aviation tax

Data centers: This is how high emissions could rise by 2030

Must-Reads

Climate.Table editorial team

CLIMATE.TABLE EDITORIAL OFFICE

Feature

UN report: How much the climate crisis affects Africa’s economy and national budgets

‘Deadly heatwaves, heavy rainfall, floods, droughts’

Less oil revenue and debt: Government budgets under pressure

New climate finance target: Africa calls for trillions

CBAM: Unclear rules unsettle industry

Actual emissions data required since July

Importers are liable for the accuracy of the data

Brussels’ rules cause uncertainty

The de minimis limit is currently 150 euros

Events

News

Climate in Numbers: Brazil hit by record drought

Education policy: How climate change affects students worldwide

Countries neglect education in their climate policy

Just around 20 US dollars per student could help

UER scandal: What the industry association ‘Initiative gegen Klimabetrug’ calls for

Industry: 7.9 billion euros in damage, 8.8 million tons of CO2

Geothermal energy: How Germany wants to facilitate its use

H2Mare: Offshore wind turbine produces hydrogen directly for the first time

Sweden: Why the country scraps its aviation tax

Data centers: This is how high emissions could rise by 2030

Must-Reads

Climate.Table editorial team

CLIMATE.TABLE EDITORIAL OFFICE

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