Shortly after the EU elections and at the start of the Bundestag election campaign, serious debates are starting on how we should deal with the challenges of the future – including the climate crisis. When presenting his report on the competitiveness of the European Union, former ECB chief Mario Draghi linked decarbonization and the preservation of prosperity – you can’t have one without the other, as we report today. And a new think tank study quantifies how much more public investment is needed in Germany to enable us to face up to the opportunities and risks of geopolitics, digitalization, demographic development and climate change. Not to forget: Today, Tuesday, the Federation of German Industries (BDI) will present its plans for how the German economyintends totransform itself for a climate-neutral future.
Last Friday, we at Climate.Table dared to take a look into the crystal ball with a few dozen experts in Berlin: What will happen in climate policy over the next ten years was the open question. What followed was a colorful mixture of warnings, forecasts, signs of hope and ideas – if you missed the lively event or want to catch up on it, we are providing a summary today.
Have fun and gain knowledge while reading!
Your Bernhard Pötter
Feature
Draghi Report: How the EU wants to combine climate action and competitiveness
The former head of the European Central Bank (ECB), Mario Draghi, presents his report on the competitiveness of the EU in Brussels.
How successful the decarbonization of the European economy is will largely determine the future competitiveness of the EU – and conversely, the future competitiveness of the EU will largely determine the success of decarbonization. This is according to a report published on Monday by a team led by former ECB President Mario Draghi for the EU Commission.
The investments required to make Europe more competitive are estimated to be at least €750 to €800 billion per year, which corresponds to between four and five percent of the EU’s economic output last year. Estimates by the International Monetary Fund assume a similar order of magnitude. Not all of this can be financed privately, writes Draghi. In the past, the public sector has financed around a fifth of productive investment in the EU.
Growth for decarbonization
The report embeds Draghi’s recommendations for successful decarbonization in a broader strategy to improve the EU’s competitiveness in the future. The investments would therefore not all directly benefit the climate, but also higher productivity and innovative capacity, improved security and reduced vulnerability to geopolitical risks. Whether the goal of a carbon-neutral, climate-friendly EU can be achieved depends on “solid economic growth rates”, the report states. However, in order to maintain growth, it is necessary to significantly improve the EU’s competitiveness, especially in relation to the USA and China.
Draghi sees an opportunity for this precisely in decarbonization: Through it, the EU could both “take the lead in new, clean technologies and in solutions for the circular economy, as well as shift electricity generation towards safe, cost-effective clean energy sources, with which the EU is inherently generously endowed”, he writes. “But for Europe to seize this opportunity, all policies must be synchronized with the EU’s decarbonization goals.“
Adapted strategy depending on the sector
To this end, Draghi proposes a “joint plan for decarbonization and competitiveness”, which pursues an adapted strategy depending on the economic sector. The former ECB chief recommends distinguishing between four cases:
Sectors in which the EU cannot be a serious competitor due to cost disadvantages. In these areas, it makes “economic sense to import the necessary technology” and at the same time to diversify suppliers as much as possible in order to limit dependencies.
Sectors in which the EU is “concerned about where production takes place”, for example to protect jobs from unfair competition from abroad, but where the origin of the technology seems irrelevant. Here, Draghi advises promoting foreign direct investment in the EU and at the same time taking trade measures to offset any unfair cost advantages of foreign production. This approach is currently being applied “de facto” in the automotive sector.
Sectors in which the EU hasastrategic interest in keeping production and expertise in Europe, for example in the event of geopolitical tensions. Draghi recommends, for example, local content requirements and the obligation for foreign companies to enter into joint ventures with European companies.
Young industries where the EU has an innovative edge. “In this case, there is a well-established set of rules to apply a whole range of trade discrimination until the industry has reached a sufficient scale and the safeguard measures can be lifted.”
Cheap energy, support for the automotive sector
Draghi also defines several key elements of successful decarbonization in the report:
Reducing energy costs for end consumers is an important goal. In order to achieve this, price fluctuations should be reduced, particularly in the gas market, for example through the joint purchase of LNG, which would allow the EU to make better use of its market power than before. At the same time, the prices for renewable energies should be decoupled from gas prices, for example through an appropriate market design, lower taxes or guarantees from the European Investment Bank (EIB).
“A key element in accelerating decarbonization will be unlocking the potential of clean energy through a common EU focus on electricity grids“, the report states. The importance of the grids cannot be overestimated.
More centralized governance: Decisions of cross-border significance should be taken centrally at EU level in the future. This includes centralized capacities for review and control.
Energy-intensive industries should be given special support: through “sufficient financial resources” from national budgets and from EU funds, for example from the ETS. The funds should be geared towards “improving the capabilities needed for decarbonization”, for example for the introduction of green hydrogen, CCS or to “support the decarbonization of transport”. The report also recommends closely monitoring how the European Border Adjustment Mechanism CBAM works in the future.
Europe should refocus its support for the production of clean technologies and “concentrate on technologies where it either has a leading role or where there is a strategic case for developing domestic capacity”.
Draghi is also proposing special support for the automotive sector. An “industrial action plan” should “prevent a radical exodus of production from the EU or a rapid takeover of EU factories and companies by state-supported foreign producers, while continuing decarbonization”.
In addition, the entire strategy for sustainable transport is to be geared more towards competitiveness, for example by removing barriers between EU countries.
Trade policy is “fundamental” to combining competitiveness and decarbonization, for example through strategic partnerships along important supply chains.
Criticism from NGOs
Environmental organizations commented critically on Draghi’s proposals: “He is falling into the dangerous trap of advocating a ‘technology-neutral’ approach”, wrote the European Environmental Bureau (EEB) network in an initial reaction. This would treat all technologies, including nuclear energy and CCS, in the same way as renewable energies, although the Intergovernmental Panel on Climate Change (IPCC) considers nuclear energy and CCS to be “among the least effective technologies for mitigating climate change”. “Putting them on an equal footing with renewables, which can be built much faster and cheaper, will delay decarbonization and lead to higher energy prices for European industry.”
CCS
Klima & Umwelt
Forecasts at the Climate.Table summit: What will the next ten years of climate policy bring?
At the event “100 Points of View: The next 10 years of climate policy”, climate experts discussed the challenges in climate policy.
How can the acceptance of climate policy be improved? What technological breakthroughs will there be in the next ten years? And how will the increasingly tense geopolitical situation affect climate policy? At the Climate.Table event “100 Points of View: The Next 10 Years of Climate Policy” last Friday, climate experts took a look into the crystal ball in an informal setting and thought out loud about social, political and technological developments over the next ten years. Below you will find a selection of these future “predictions” – freely formulated by experts, but without any guarantee.
Dwindling acceptance of political intervention
The participants at the event agreed that the increasing consequences of climate change and the dwindling acceptance of political intervention in all policy areas will present society with major challenges:
According to Felix Matthes from the Öko-Institut, the scaling back of public services in recent years (e.g. hospitals, public transport) is jeopardizing social acceptance of politics and therefore climate policy. Jörg Haas from the Böll Foundation demands that the state must become more of an investor to halt the destabilization of the political landscape.
According to Jakob Graichen of the Öko-Institut, climate change will cause massive economic, political and social upheaval, such as conflicts, uninhabitable regions of the world and climate refugees.
We will (have to) fall into emergency mode because a major climate catastrophe will happen in the next ten years. Niklas Höhne from the New Climate Institute says that the climate community already needs to think about how this emergency mode can be successfully tackled.
False information will increase and the lobbying influence against the transformation will be even greater, Höhne suspects.
A glimmer of hope: Civil society is alive. Many people have set out to live more sustainably, says Christiane Averbeck from the Climate Alliance Germany. However, the framework conditions for this need to be further improved. The expansion of climate-friendly infrastructure could be a sign of hope for society. In ten years, the Fridays For Future generation will have taken over political offices and occupy decision-making positions, says Hanna Fekete from the New Climate Institute.
Geopolitics: tensions, crises and protectionism
In geopolitics, many climate experts see major tensions and upheavals on the horizon:
With the increasing human misery caused by the climate crisis, debates on justice at a global levelwill increase, says Camilla Bausch from the Ecologic Institute. Simon Müller from Agora Energiewende adds: “Climate disasters will cost many lives. If their own populations are worse off, many governments will turn their gaze inwards.
The protectionist tendencies in global trade and also in the exchange of ideas will increase massively, says Matthias Buck from Agora Energiewende. Because the European automotive industry, for example, will come under massive pressure, protectionism could also have a negative impact on the phase-out of combustion engines in Europe. According to Mattias Koch from the consulting firm Rödl und Partner, the industrial base in Germanymust be secured and strengthened. Otherwise, public acceptance of climate policy will dwindle.
According to Buck, bilateral channelswill become increasingly relevant in climate policy. The states’ own safeguards will become more important and the COP process will be weakened.
Technologies can help with acceptance
Technological progress gives many people hope:
The dynamics of technological progress are still underestimated, says Martin Cames from the Öko-Institut. Progress and price reductions are helping to create a climate policy that will be less challenging for society than many fear.
In the next ten years, we will go through many “hype cycles“, says Matthes. Many technologies will be hailed as saviors. In ten years, we will have arrived in a more rational world, says Matthes.
According to Höhne, renewable energies will grow rapidly over the next ten years and prices will continue to fall. However, there will also be bad investments and grid problems.
However, there are also technological challenges:
More needs to happen in terms of electrification, Buck demands. Müller is more optimistic here and sees a great leap forward on the horizon. Heat pumps and electric cars will become the new normal in the future.
Technologies must also be accepted by the population, says Matthes. He sees new tensions arising here because some interest groups would rather hold on to the old.
In ten years, there will be even more heated debates about technologies – and many fake debates about supposed solutions such as geoengineering, says Graichen.
The end of the debt brake and a speed limit?
When it came to concrete climate policy for the next ten years, some experts made specific proposals:
The German debt brake will no longer exist in ten years, says Linda Kalcher from the think tank Strategic Perspectives. Matthias Duwe from the Ecologic Institute agrees that budget limits will alsobe lifted at European level.
Germany will have a speed limit, says Fekete. In the problem sectors of buildings and transport, Germany will be much further ahead in ten years than it is today, Höhne speculates.
Countries that do not adhere to strict standards for avoiding methane emissionsin oil and gas production over the next ten years will be politically isolated, says Buck. Sellers of fossil fuels will be held much more accountable in ten years than they are today.
Klimapolitik
Climate fraud: Why Germany rejected CO2 certificates in eight cases
Entrance to the Federal Environment Agency: the trail of fraud leads to China
The German Federal Environment Agency (UBA) has refused to release the certificates in eight cases as part of the scandal surrounding the alleged fraud with climate certificates in China. Several large, internationally active companies had applied for the certificates in question, as the agency announced on Friday. Using the eight denied certificates, the companies in question wanted to offset a total of 215,000 tons of allegedly saved CO2 emissions.
The background is a systemic fraud that became public in June, in which German and, above all, Chinese suppliers, buyers, and auditors of these certificates are implicated. The agency initially refused to provide more detailed information on the companies involved for legal reasons. Specifically, the case concerns so-called “Upstream Emission Reductions” (UER) projects. Germany introduced the Upstream Emission Reduction Ordinance in 2018. As in 14 other EU countries, it was intended to help reduce CO2 emissions in transport by offsetting emission reductions during production against the obligation to reduce CO2 emissions from the sale of fossil fuels (GHG quota).
In focus: certificates for emission reduction in China
According to the UBA, this involves measures such as reducing CO2 emissions during fuel production, even before the corresponding crude oil is processed in the refinery. A typical example is stopping the so-called flaring of associated gases by converting the relevant facilities. In 2022, oil companies in Germany had to cut their emissions by 14 million tons of CO2 through this GHG quota. According to the Federal Ministry for the Environment, just over a tenth of this, 1.9 million tons, came from UER. In October 2023, there were first indications of irregularities in the certificates, especially from China: The certificates reportedly did not comply with the regulations or came from companies that did not exist.
The UBA launched a fraud investigation in cooperation with a law firm, foreign authorities, and the German public prosecutor’s office. According to the UBA, the allegations only became more concrete in late February 2024. The Ministry of the Environment stated, “The system has proven to be opaque and prone to errors – partly because German authorities can hardly monitor it.” The German government terminated the UER practice prematurely and is now investigating all projects for which applications have been submitted.
Legal and technical inconsistencies
This means the end of eight projects for the time being. “No new UER certificates from these projects will be released onto the market. This is good news,” the Federal Environment Agency emphasized. In parallel, the Berlin public prosecutor’s office is currently investigating 17 people on suspicion of “joint commercial fraud.”
In seven of the eight UER projects currently suspended, the companies themselves withdrew the applications for the activation of UER certificates for 2023 after the UBA confronted the project sponsors “with serious legal and technical inconsistencies in their projects and threatened an on-site inspection.” The UBA prohibited the eighth project in China from issuing UER certificates because it had been initiated prematurely and without permission. This was discovered through technical analyses and satellite images.
Investigators focus on 13 other projects in China
The UBA announced plans to investigate 13 other projects in China. The UBA has not been given the opportunity to carry out on-site inspections for the majority of the 21 projects in China. This is a “very strong indication” that the project sponsors are not prepared to fulfill their obligations under the relevant regulations or to ensure the required monitoring of the projects, it said.
The UBA will also review other critical UER projects worldwide “until all allegations have been cleared up.” The UBA says that UER projects are attractive to the petroleum industry because they represent a comparatively cost-effective way to fulfill the GHG reduction quotas stipulated in the German Federal Immission Control Act.
The competition was damaged
However, the alleged fraud did not harm German car owners, as some have reported, but – in addition to the atmosphere – above all biofuel manufacturers, whose products lost market share due to the UER certificates. The “Initiative gegen Klimabetrug,” founded by the affected sector, estimates the damage at 7.9 billion euros and 8.8 million tons of greenhouse gases. It calls for compensation for the failed climate action and the cancellation of all certificates.
The CDU/CSU parliamentary group in the German Parliament has repeatedly summoned UBA head Dirk Messner and Environment Minister Steffi Lemke to a hearing before the Environment Committee. As environmental policy spokesperson Anja Weisgerber told Table.Briefings, “We are also planning to request another special meeting of the Environment Committee on this topic this week.” No decision has yet been made regarding a separate parliamentary review board on the issue. In any case, the cancellation of the eight UER projects is by no means the end of the fraud saga.
Climate & Environment
Klima & Umwelt
Investments: That’s how many billions Germany’s climate targets need
Many schools were renovated during the summer vacation, like the Mosaikschule in Gladbeck, NRW.
In an assessment of the lack of necessary future investments in Germany, climate policy issues account for almost half of the requirement. Of the total of €782 billion needed between 2025 and 2030 for “broadly accepted goals” such as defense, health or economic resilience, around €340 billion would have to flow into the areas of decarbonization, transport and adaptation to climate change. This is one of the findings of the study “What does a secure, liveable and sustainable future cost?“, which was presented by the think tank “Dezernat Zukunft” on Monday.
The study quantifies the price of a comprehensive modernization of Germany in the areas of education, decarbonization, digitalization, research, health, transport, housing, internal security, climate adaptation, economic resilience, defense and aspects of external security that are hardly politically controversial. In over 70 expert discussions, the team of authors has identified the gaps in investment and operating costs that exist between what is currently planned and what is necessary. This and similar studies by other actors are intended to initiate a debate before next year’s federal elections on how the modernization of future tasks in Germany can be financed.
€782 billion extra, €340 billion for climate action
According to the study, a total of €782 billion is needed in addition to the current budget plans, around 3 percent of gross domestic product per year: this corresponds to around 11 percent of current federal spending, 5 percent of state spending and 10 percent of local government spending. According to the study, this would put Germany on a par with Austria or Finland in terms of the proportion of government spending – and a large part of the expenditure could be financed even if the debt brake were to be adhered to.
In order to meet the targets of the Climate Protection Act for decarbonization, the study calculates a total funding requirement for the federal government of around €340 billion from 2025 to 2030 – i.e. around €57 billion a year, or 1.3 percent of GDP. The necessary additional federal expenditure is reduced by the state revenue from emissions trading: if the CO2 price is high, the federal government will need an additional €111 billion, if it is lower – which is likely – up to €208 billion for the period. Added to this are the requirements of the federal states and municipalities; overall, the study estimates that additional public investment of between €160 and €255 billion is required for decarbonization.
Most of the money for building renovation
In detail, the federal government would therefore also need
€208 billion for decarbonization;
€62 billion for the expansion of the railroads;
€38 billion for the expansion of public transport;
€38 billion for adaptation to climate change.
The renovation of buildings requires the most money. This is followed by the expansion of renewable energies and controllable capacities as well as the production and import of hydrogen.
At the same time, but independently of this, the state-run German Energy Agency Dena presented a study on what the energy-efficient refurbishment of unoccupied buildings in Germany would cost. According to the study, the climate-neutral building stock willrequire a total of around €120 billion in investmentby 2045 – around €6 billion a year, of which €4 billion will go to local authorities because they own these buildings.
Schuldenbremse
News
Emissions trading: China announces expansion for the end of 2024
China wants to expand its national emissions trading scheme (ETS) to include the iron and steel, cement, and aluminum sectors by the end of 2024. Environment Minister Huang Runqiu announced this at last weekend’s opening of the Beijing Global Energy Transition Conference industry trade fair. The Ministry of the Environment refers to the period between 2024 and 2026 as the “introductory phase.”
China’s ETS is currently limited to around 2,200 coal-fired and a few gas-fired power plants. The expansion is based very closely on the previous ETS: The CO2 certificates are to be allocated freely based on a guideline value for the CO2 intensity of production. If a steelworks, cement manufacturer or aluminum smelter produces more sustainably than the benchmark for the entire industry, it can sell CO2 certificates. If production is dirtier, additional certificates must be purchased. No certificates need to be purchased for the expansion of production itself, i.e. if emissions rise due to an increase in production. Analysts criticize this design of the Chinese ETS and complain that it would not set a correct CO2 price. In the aluminum industry, emissions of carbon tetrafluoride (CF4) and carbon hexafluoride (C2F6) are also to be covered by trading, as analyst Lauri Myllyvirta writes on X.
The climate action effect of emissions trading is still very limited, as analyst Xinyi Shen from the Centre for Research on Energy and Clean Air (CREA) writes on X. The ETS has no emissions cap, the majority of CO2 certificates are allocated free of charge and the CO2 price is still relatively low. “At present, regulators seem to be focusing more on improving data collection and familiarizing regulated companies with the details of the system than on reducing emissions,” says Xinyi Shen. An emissions cap for the ETS is not expected until 2030, when China plans to introduce such a cap for the entire economy and society. From 2026, China’s steel, cement and aluminum exporters will face CO2 costs from the European Carbon Border Adjustment Mechanism (CBAM). nib
China
Study: More acceptance for CO2 price if the money flows back
Public acceptance of CO2 pricing increases as soon as there is “some form of revenue redistribution”. This is the result of a study recently published by the Mercator Research Institute on Global Commons and Climate Change (MCC). The authors analyzed 35 studies with 70 surveys on carbon pricing and revenue redistribution. The result: “CO2 pricing consistently meets with more approval with redistribution than without.”
According to the MCC researchers, there is plenty of scope for political implementation: CO2 prices are most popular in cases where “the revenue is used for climate-friendly investments, such as aid for better public transport or subsidies for climate-friendly household appliances”.Targeted cash transfers to households in needalso scored very well.
Respondents were comparatively skeptical about concepts such as the “climate money” being discussed in Germany, i.e. when it comes to “uniform per capita transfers to all” citizens. Politicians need to “communicate the idea of per capita reimbursement even better”, says study co-author Jan Steckel. Everyone could “influence the individual CO2 price costs, I have the climate money for sure – so if I change something, I’m better off”, says Steckel, describing the logic behind this. nib
Klimapolitik
South Korea: Over 30,000 demonstrators demand better climate policy
More than 30,000 protesters gathered in sweltering heat in South Korea’s capital on Saturday, demanding that the government take more forceful action against global warming. The protest was organized by the 907 Climate Justice March Group committee after South Korea’s Supreme Court ruled last month that South Korea’s climate change law does not protect basic human rights and does not include goals to protect future generations. The night-time temperature in Seoul has not been below 25 degrees Celsius for 20 consecutive nights.
The 200 plaintiffs, including young climate activists and even some infants, argued before the Constitutional Court that the government was violating citizens’ human rights by not doing enough to combat climate change. South Korea, which has set itself the goal of being CO2-neutral by 2050, remains a major coal user and is slow to embrace renewable energy. Last year, the government lowered its 2030 targets for curbing industrial greenhouse gas emissions but is sticking to its national goal of reducing emissions by 40 percent compared to 2018. nib/rtr
Klimaaktivisten
Global Witness: Where the fight for the environment is particularly dangerous
Colombia was the most dangerous country in the world for environmental activists in 2023: At least 79 people were murdered there for opposing the destruction of their livelihoods – more than ever before in a single country. This was reported by the human rights organization Global Witness in a new report. In Brazil, 25 people were murdered, in Mexico and Honduras 18 each.
At least 196 environmental activists were killed worldwide last year; since 2012, a total of 2106 have been killed. According to the report, indigenous and black people were targeted disproportionately often. In many cases, the subsequent murder victims were campaigning against mining, deforestation, agriculture, road construction or hydropower projects.
Even if counted over a longer period of time, Colombia leads the statistics: According to Global Witness, 461 environmental activists were killed there between 2012 and 2023, the highest number on record. Even after the peace agreement with the Farc eight years ago, the country has not become safe for them. As Colombia is hosting the UN Biodiversity Conference COP16in the fall, the country is receiving special attention this year.
In addition to the murders, Global Witness also denounces other tactics used to silence environmental activists: In Mexico and the Philippines, people are simply made to disappear. In the USA and Europe, “lawsare increasingly being used as weapons against environmental activists, and harsh sentences are more often imposed on those who have played a role in climate protests”. The global trend towards criminalization is “worrying”. ae
Klimaaktivisten
CO2 fleet limits: ACEA President warns of 15 billion fines for 2025
According to Renault head Luca de Meo, the European car industry could face billions in fines due to falling demand for electric vehicles. “If electric vehicles remain at current levels, the European industry may have to pay €15 billion in fines or give up the production of more than 2.5 million vehicles,” said de Meo. Car manufacturers face stricter CO2 targets from 2025 as the cap on average emissions from new car sales falls from 116 grams per kilometer in 2024 to 94 grams per kilometer.
“The pace of conversion to electric vehicles is only half of what we would need to reach the targets that would allow us to avoid paying fines,” de Meo, who is also President of the European Automobile Manufacturers’ Association (ACEA), said of the sector. Exceeding the CO2 limits can lead to fines of €95 per CO2 gram exceeded per kilometer multiplied by the number of vehicles sold. This could result in fines of hundreds of millions of euros for large car manufacturers. “Everyone is talking about 2035, ten years from now, but we should be talking about 2025 because we already have problems now,” he said. “We need to get some flexibility. It’s very, very dangerous to set deadlines and fines without having the possibility to make this more flexible.” rtr
Shortly after the EU elections and at the start of the Bundestag election campaign, serious debates are starting on how we should deal with the challenges of the future – including the climate crisis. When presenting his report on the competitiveness of the European Union, former ECB chief Mario Draghi linked decarbonization and the preservation of prosperity – you can’t have one without the other, as we report today. And a new think tank study quantifies how much more public investment is needed in Germany to enable us to face up to the opportunities and risks of geopolitics, digitalization, demographic development and climate change. Not to forget: Today, Tuesday, the Federation of German Industries (BDI) will present its plans for how the German economyintends totransform itself for a climate-neutral future.
Last Friday, we at Climate.Table dared to take a look into the crystal ball with a few dozen experts in Berlin: What will happen in climate policy over the next ten years was the open question. What followed was a colorful mixture of warnings, forecasts, signs of hope and ideas – if you missed the lively event or want to catch up on it, we are providing a summary today.
Have fun and gain knowledge while reading!
Your Bernhard Pötter
Feature
Draghi Report: How the EU wants to combine climate action and competitiveness
The former head of the European Central Bank (ECB), Mario Draghi, presents his report on the competitiveness of the EU in Brussels.
How successful the decarbonization of the European economy is will largely determine the future competitiveness of the EU – and conversely, the future competitiveness of the EU will largely determine the success of decarbonization. This is according to a report published on Monday by a team led by former ECB President Mario Draghi for the EU Commission.
The investments required to make Europe more competitive are estimated to be at least €750 to €800 billion per year, which corresponds to between four and five percent of the EU’s economic output last year. Estimates by the International Monetary Fund assume a similar order of magnitude. Not all of this can be financed privately, writes Draghi. In the past, the public sector has financed around a fifth of productive investment in the EU.
Growth for decarbonization
The report embeds Draghi’s recommendations for successful decarbonization in a broader strategy to improve the EU’s competitiveness in the future. The investments would therefore not all directly benefit the climate, but also higher productivity and innovative capacity, improved security and reduced vulnerability to geopolitical risks. Whether the goal of a carbon-neutral, climate-friendly EU can be achieved depends on “solid economic growth rates”, the report states. However, in order to maintain growth, it is necessary to significantly improve the EU’s competitiveness, especially in relation to the USA and China.
Draghi sees an opportunity for this precisely in decarbonization: Through it, the EU could both “take the lead in new, clean technologies and in solutions for the circular economy, as well as shift electricity generation towards safe, cost-effective clean energy sources, with which the EU is inherently generously endowed”, he writes. “But for Europe to seize this opportunity, all policies must be synchronized with the EU’s decarbonization goals.“
Adapted strategy depending on the sector
To this end, Draghi proposes a “joint plan for decarbonization and competitiveness”, which pursues an adapted strategy depending on the economic sector. The former ECB chief recommends distinguishing between four cases:
Sectors in which the EU cannot be a serious competitor due to cost disadvantages. In these areas, it makes “economic sense to import the necessary technology” and at the same time to diversify suppliers as much as possible in order to limit dependencies.
Sectors in which the EU is “concerned about where production takes place”, for example to protect jobs from unfair competition from abroad, but where the origin of the technology seems irrelevant. Here, Draghi advises promoting foreign direct investment in the EU and at the same time taking trade measures to offset any unfair cost advantages of foreign production. This approach is currently being applied “de facto” in the automotive sector.
Sectors in which the EU hasastrategic interest in keeping production and expertise in Europe, for example in the event of geopolitical tensions. Draghi recommends, for example, local content requirements and the obligation for foreign companies to enter into joint ventures with European companies.
Young industries where the EU has an innovative edge. “In this case, there is a well-established set of rules to apply a whole range of trade discrimination until the industry has reached a sufficient scale and the safeguard measures can be lifted.”
Cheap energy, support for the automotive sector
Draghi also defines several key elements of successful decarbonization in the report:
Reducing energy costs for end consumers is an important goal. In order to achieve this, price fluctuations should be reduced, particularly in the gas market, for example through the joint purchase of LNG, which would allow the EU to make better use of its market power than before. At the same time, the prices for renewable energies should be decoupled from gas prices, for example through an appropriate market design, lower taxes or guarantees from the European Investment Bank (EIB).
“A key element in accelerating decarbonization will be unlocking the potential of clean energy through a common EU focus on electricity grids“, the report states. The importance of the grids cannot be overestimated.
More centralized governance: Decisions of cross-border significance should be taken centrally at EU level in the future. This includes centralized capacities for review and control.
Energy-intensive industries should be given special support: through “sufficient financial resources” from national budgets and from EU funds, for example from the ETS. The funds should be geared towards “improving the capabilities needed for decarbonization”, for example for the introduction of green hydrogen, CCS or to “support the decarbonization of transport”. The report also recommends closely monitoring how the European Border Adjustment Mechanism CBAM works in the future.
Europe should refocus its support for the production of clean technologies and “concentrate on technologies where it either has a leading role or where there is a strategic case for developing domestic capacity”.
Draghi is also proposing special support for the automotive sector. An “industrial action plan” should “prevent a radical exodus of production from the EU or a rapid takeover of EU factories and companies by state-supported foreign producers, while continuing decarbonization”.
In addition, the entire strategy for sustainable transport is to be geared more towards competitiveness, for example by removing barriers between EU countries.
Trade policy is “fundamental” to combining competitiveness and decarbonization, for example through strategic partnerships along important supply chains.
Criticism from NGOs
Environmental organizations commented critically on Draghi’s proposals: “He is falling into the dangerous trap of advocating a ‘technology-neutral’ approach”, wrote the European Environmental Bureau (EEB) network in an initial reaction. This would treat all technologies, including nuclear energy and CCS, in the same way as renewable energies, although the Intergovernmental Panel on Climate Change (IPCC) considers nuclear energy and CCS to be “among the least effective technologies for mitigating climate change”. “Putting them on an equal footing with renewables, which can be built much faster and cheaper, will delay decarbonization and lead to higher energy prices for European industry.”
CCS
Klima & Umwelt
Forecasts at the Climate.Table summit: What will the next ten years of climate policy bring?
At the event “100 Points of View: The next 10 years of climate policy”, climate experts discussed the challenges in climate policy.
How can the acceptance of climate policy be improved? What technological breakthroughs will there be in the next ten years? And how will the increasingly tense geopolitical situation affect climate policy? At the Climate.Table event “100 Points of View: The Next 10 Years of Climate Policy” last Friday, climate experts took a look into the crystal ball in an informal setting and thought out loud about social, political and technological developments over the next ten years. Below you will find a selection of these future “predictions” – freely formulated by experts, but without any guarantee.
Dwindling acceptance of political intervention
The participants at the event agreed that the increasing consequences of climate change and the dwindling acceptance of political intervention in all policy areas will present society with major challenges:
According to Felix Matthes from the Öko-Institut, the scaling back of public services in recent years (e.g. hospitals, public transport) is jeopardizing social acceptance of politics and therefore climate policy. Jörg Haas from the Böll Foundation demands that the state must become more of an investor to halt the destabilization of the political landscape.
According to Jakob Graichen of the Öko-Institut, climate change will cause massive economic, political and social upheaval, such as conflicts, uninhabitable regions of the world and climate refugees.
We will (have to) fall into emergency mode because a major climate catastrophe will happen in the next ten years. Niklas Höhne from the New Climate Institute says that the climate community already needs to think about how this emergency mode can be successfully tackled.
False information will increase and the lobbying influence against the transformation will be even greater, Höhne suspects.
A glimmer of hope: Civil society is alive. Many people have set out to live more sustainably, says Christiane Averbeck from the Climate Alliance Germany. However, the framework conditions for this need to be further improved. The expansion of climate-friendly infrastructure could be a sign of hope for society. In ten years, the Fridays For Future generation will have taken over political offices and occupy decision-making positions, says Hanna Fekete from the New Climate Institute.
Geopolitics: tensions, crises and protectionism
In geopolitics, many climate experts see major tensions and upheavals on the horizon:
With the increasing human misery caused by the climate crisis, debates on justice at a global levelwill increase, says Camilla Bausch from the Ecologic Institute. Simon Müller from Agora Energiewende adds: “Climate disasters will cost many lives. If their own populations are worse off, many governments will turn their gaze inwards.
The protectionist tendencies in global trade and also in the exchange of ideas will increase massively, says Matthias Buck from Agora Energiewende. Because the European automotive industry, for example, will come under massive pressure, protectionism could also have a negative impact on the phase-out of combustion engines in Europe. According to Mattias Koch from the consulting firm Rödl und Partner, the industrial base in Germanymust be secured and strengthened. Otherwise, public acceptance of climate policy will dwindle.
According to Buck, bilateral channelswill become increasingly relevant in climate policy. The states’ own safeguards will become more important and the COP process will be weakened.
Technologies can help with acceptance
Technological progress gives many people hope:
The dynamics of technological progress are still underestimated, says Martin Cames from the Öko-Institut. Progress and price reductions are helping to create a climate policy that will be less challenging for society than many fear.
In the next ten years, we will go through many “hype cycles“, says Matthes. Many technologies will be hailed as saviors. In ten years, we will have arrived in a more rational world, says Matthes.
According to Höhne, renewable energies will grow rapidly over the next ten years and prices will continue to fall. However, there will also be bad investments and grid problems.
However, there are also technological challenges:
More needs to happen in terms of electrification, Buck demands. Müller is more optimistic here and sees a great leap forward on the horizon. Heat pumps and electric cars will become the new normal in the future.
Technologies must also be accepted by the population, says Matthes. He sees new tensions arising here because some interest groups would rather hold on to the old.
In ten years, there will be even more heated debates about technologies – and many fake debates about supposed solutions such as geoengineering, says Graichen.
The end of the debt brake and a speed limit?
When it came to concrete climate policy for the next ten years, some experts made specific proposals:
The German debt brake will no longer exist in ten years, says Linda Kalcher from the think tank Strategic Perspectives. Matthias Duwe from the Ecologic Institute agrees that budget limits will alsobe lifted at European level.
Germany will have a speed limit, says Fekete. In the problem sectors of buildings and transport, Germany will be much further ahead in ten years than it is today, Höhne speculates.
Countries that do not adhere to strict standards for avoiding methane emissionsin oil and gas production over the next ten years will be politically isolated, says Buck. Sellers of fossil fuels will be held much more accountable in ten years than they are today.
Klimapolitik
Climate fraud: Why Germany rejected CO2 certificates in eight cases
Entrance to the Federal Environment Agency: the trail of fraud leads to China
The German Federal Environment Agency (UBA) has refused to release the certificates in eight cases as part of the scandal surrounding the alleged fraud with climate certificates in China. Several large, internationally active companies had applied for the certificates in question, as the agency announced on Friday. Using the eight denied certificates, the companies in question wanted to offset a total of 215,000 tons of allegedly saved CO2 emissions.
The background is a systemic fraud that became public in June, in which German and, above all, Chinese suppliers, buyers, and auditors of these certificates are implicated. The agency initially refused to provide more detailed information on the companies involved for legal reasons. Specifically, the case concerns so-called “Upstream Emission Reductions” (UER) projects. Germany introduced the Upstream Emission Reduction Ordinance in 2018. As in 14 other EU countries, it was intended to help reduce CO2 emissions in transport by offsetting emission reductions during production against the obligation to reduce CO2 emissions from the sale of fossil fuels (GHG quota).
In focus: certificates for emission reduction in China
According to the UBA, this involves measures such as reducing CO2 emissions during fuel production, even before the corresponding crude oil is processed in the refinery. A typical example is stopping the so-called flaring of associated gases by converting the relevant facilities. In 2022, oil companies in Germany had to cut their emissions by 14 million tons of CO2 through this GHG quota. According to the Federal Ministry for the Environment, just over a tenth of this, 1.9 million tons, came from UER. In October 2023, there were first indications of irregularities in the certificates, especially from China: The certificates reportedly did not comply with the regulations or came from companies that did not exist.
The UBA launched a fraud investigation in cooperation with a law firm, foreign authorities, and the German public prosecutor’s office. According to the UBA, the allegations only became more concrete in late February 2024. The Ministry of the Environment stated, “The system has proven to be opaque and prone to errors – partly because German authorities can hardly monitor it.” The German government terminated the UER practice prematurely and is now investigating all projects for which applications have been submitted.
Legal and technical inconsistencies
This means the end of eight projects for the time being. “No new UER certificates from these projects will be released onto the market. This is good news,” the Federal Environment Agency emphasized. In parallel, the Berlin public prosecutor’s office is currently investigating 17 people on suspicion of “joint commercial fraud.”
In seven of the eight UER projects currently suspended, the companies themselves withdrew the applications for the activation of UER certificates for 2023 after the UBA confronted the project sponsors “with serious legal and technical inconsistencies in their projects and threatened an on-site inspection.” The UBA prohibited the eighth project in China from issuing UER certificates because it had been initiated prematurely and without permission. This was discovered through technical analyses and satellite images.
Investigators focus on 13 other projects in China
The UBA announced plans to investigate 13 other projects in China. The UBA has not been given the opportunity to carry out on-site inspections for the majority of the 21 projects in China. This is a “very strong indication” that the project sponsors are not prepared to fulfill their obligations under the relevant regulations or to ensure the required monitoring of the projects, it said.
The UBA will also review other critical UER projects worldwide “until all allegations have been cleared up.” The UBA says that UER projects are attractive to the petroleum industry because they represent a comparatively cost-effective way to fulfill the GHG reduction quotas stipulated in the German Federal Immission Control Act.
The competition was damaged
However, the alleged fraud did not harm German car owners, as some have reported, but – in addition to the atmosphere – above all biofuel manufacturers, whose products lost market share due to the UER certificates. The “Initiative gegen Klimabetrug,” founded by the affected sector, estimates the damage at 7.9 billion euros and 8.8 million tons of greenhouse gases. It calls for compensation for the failed climate action and the cancellation of all certificates.
The CDU/CSU parliamentary group in the German Parliament has repeatedly summoned UBA head Dirk Messner and Environment Minister Steffi Lemke to a hearing before the Environment Committee. As environmental policy spokesperson Anja Weisgerber told Table.Briefings, “We are also planning to request another special meeting of the Environment Committee on this topic this week.” No decision has yet been made regarding a separate parliamentary review board on the issue. In any case, the cancellation of the eight UER projects is by no means the end of the fraud saga.
Climate & Environment
Klima & Umwelt
Investments: That’s how many billions Germany’s climate targets need
Many schools were renovated during the summer vacation, like the Mosaikschule in Gladbeck, NRW.
In an assessment of the lack of necessary future investments in Germany, climate policy issues account for almost half of the requirement. Of the total of €782 billion needed between 2025 and 2030 for “broadly accepted goals” such as defense, health or economic resilience, around €340 billion would have to flow into the areas of decarbonization, transport and adaptation to climate change. This is one of the findings of the study “What does a secure, liveable and sustainable future cost?“, which was presented by the think tank “Dezernat Zukunft” on Monday.
The study quantifies the price of a comprehensive modernization of Germany in the areas of education, decarbonization, digitalization, research, health, transport, housing, internal security, climate adaptation, economic resilience, defense and aspects of external security that are hardly politically controversial. In over 70 expert discussions, the team of authors has identified the gaps in investment and operating costs that exist between what is currently planned and what is necessary. This and similar studies by other actors are intended to initiate a debate before next year’s federal elections on how the modernization of future tasks in Germany can be financed.
€782 billion extra, €340 billion for climate action
According to the study, a total of €782 billion is needed in addition to the current budget plans, around 3 percent of gross domestic product per year: this corresponds to around 11 percent of current federal spending, 5 percent of state spending and 10 percent of local government spending. According to the study, this would put Germany on a par with Austria or Finland in terms of the proportion of government spending – and a large part of the expenditure could be financed even if the debt brake were to be adhered to.
In order to meet the targets of the Climate Protection Act for decarbonization, the study calculates a total funding requirement for the federal government of around €340 billion from 2025 to 2030 – i.e. around €57 billion a year, or 1.3 percent of GDP. The necessary additional federal expenditure is reduced by the state revenue from emissions trading: if the CO2 price is high, the federal government will need an additional €111 billion, if it is lower – which is likely – up to €208 billion for the period. Added to this are the requirements of the federal states and municipalities; overall, the study estimates that additional public investment of between €160 and €255 billion is required for decarbonization.
Most of the money for building renovation
In detail, the federal government would therefore also need
€208 billion for decarbonization;
€62 billion for the expansion of the railroads;
€38 billion for the expansion of public transport;
€38 billion for adaptation to climate change.
The renovation of buildings requires the most money. This is followed by the expansion of renewable energies and controllable capacities as well as the production and import of hydrogen.
At the same time, but independently of this, the state-run German Energy Agency Dena presented a study on what the energy-efficient refurbishment of unoccupied buildings in Germany would cost. According to the study, the climate-neutral building stock willrequire a total of around €120 billion in investmentby 2045 – around €6 billion a year, of which €4 billion will go to local authorities because they own these buildings.
Schuldenbremse
News
Emissions trading: China announces expansion for the end of 2024
China wants to expand its national emissions trading scheme (ETS) to include the iron and steel, cement, and aluminum sectors by the end of 2024. Environment Minister Huang Runqiu announced this at last weekend’s opening of the Beijing Global Energy Transition Conference industry trade fair. The Ministry of the Environment refers to the period between 2024 and 2026 as the “introductory phase.”
China’s ETS is currently limited to around 2,200 coal-fired and a few gas-fired power plants. The expansion is based very closely on the previous ETS: The CO2 certificates are to be allocated freely based on a guideline value for the CO2 intensity of production. If a steelworks, cement manufacturer or aluminum smelter produces more sustainably than the benchmark for the entire industry, it can sell CO2 certificates. If production is dirtier, additional certificates must be purchased. No certificates need to be purchased for the expansion of production itself, i.e. if emissions rise due to an increase in production. Analysts criticize this design of the Chinese ETS and complain that it would not set a correct CO2 price. In the aluminum industry, emissions of carbon tetrafluoride (CF4) and carbon hexafluoride (C2F6) are also to be covered by trading, as analyst Lauri Myllyvirta writes on X.
The climate action effect of emissions trading is still very limited, as analyst Xinyi Shen from the Centre for Research on Energy and Clean Air (CREA) writes on X. The ETS has no emissions cap, the majority of CO2 certificates are allocated free of charge and the CO2 price is still relatively low. “At present, regulators seem to be focusing more on improving data collection and familiarizing regulated companies with the details of the system than on reducing emissions,” says Xinyi Shen. An emissions cap for the ETS is not expected until 2030, when China plans to introduce such a cap for the entire economy and society. From 2026, China’s steel, cement and aluminum exporters will face CO2 costs from the European Carbon Border Adjustment Mechanism (CBAM). nib
China
Study: More acceptance for CO2 price if the money flows back
Public acceptance of CO2 pricing increases as soon as there is “some form of revenue redistribution”. This is the result of a study recently published by the Mercator Research Institute on Global Commons and Climate Change (MCC). The authors analyzed 35 studies with 70 surveys on carbon pricing and revenue redistribution. The result: “CO2 pricing consistently meets with more approval with redistribution than without.”
According to the MCC researchers, there is plenty of scope for political implementation: CO2 prices are most popular in cases where “the revenue is used for climate-friendly investments, such as aid for better public transport or subsidies for climate-friendly household appliances”.Targeted cash transfers to households in needalso scored very well.
Respondents were comparatively skeptical about concepts such as the “climate money” being discussed in Germany, i.e. when it comes to “uniform per capita transfers to all” citizens. Politicians need to “communicate the idea of per capita reimbursement even better”, says study co-author Jan Steckel. Everyone could “influence the individual CO2 price costs, I have the climate money for sure – so if I change something, I’m better off”, says Steckel, describing the logic behind this. nib
Klimapolitik
South Korea: Over 30,000 demonstrators demand better climate policy
More than 30,000 protesters gathered in sweltering heat in South Korea’s capital on Saturday, demanding that the government take more forceful action against global warming. The protest was organized by the 907 Climate Justice March Group committee after South Korea’s Supreme Court ruled last month that South Korea’s climate change law does not protect basic human rights and does not include goals to protect future generations. The night-time temperature in Seoul has not been below 25 degrees Celsius for 20 consecutive nights.
The 200 plaintiffs, including young climate activists and even some infants, argued before the Constitutional Court that the government was violating citizens’ human rights by not doing enough to combat climate change. South Korea, which has set itself the goal of being CO2-neutral by 2050, remains a major coal user and is slow to embrace renewable energy. Last year, the government lowered its 2030 targets for curbing industrial greenhouse gas emissions but is sticking to its national goal of reducing emissions by 40 percent compared to 2018. nib/rtr
Klimaaktivisten
Global Witness: Where the fight for the environment is particularly dangerous
Colombia was the most dangerous country in the world for environmental activists in 2023: At least 79 people were murdered there for opposing the destruction of their livelihoods – more than ever before in a single country. This was reported by the human rights organization Global Witness in a new report. In Brazil, 25 people were murdered, in Mexico and Honduras 18 each.
At least 196 environmental activists were killed worldwide last year; since 2012, a total of 2106 have been killed. According to the report, indigenous and black people were targeted disproportionately often. In many cases, the subsequent murder victims were campaigning against mining, deforestation, agriculture, road construction or hydropower projects.
Even if counted over a longer period of time, Colombia leads the statistics: According to Global Witness, 461 environmental activists were killed there between 2012 and 2023, the highest number on record. Even after the peace agreement with the Farc eight years ago, the country has not become safe for them. As Colombia is hosting the UN Biodiversity Conference COP16in the fall, the country is receiving special attention this year.
In addition to the murders, Global Witness also denounces other tactics used to silence environmental activists: In Mexico and the Philippines, people are simply made to disappear. In the USA and Europe, “lawsare increasingly being used as weapons against environmental activists, and harsh sentences are more often imposed on those who have played a role in climate protests”. The global trend towards criminalization is “worrying”. ae
Klimaaktivisten
CO2 fleet limits: ACEA President warns of 15 billion fines for 2025
According to Renault head Luca de Meo, the European car industry could face billions in fines due to falling demand for electric vehicles. “If electric vehicles remain at current levels, the European industry may have to pay €15 billion in fines or give up the production of more than 2.5 million vehicles,” said de Meo. Car manufacturers face stricter CO2 targets from 2025 as the cap on average emissions from new car sales falls from 116 grams per kilometer in 2024 to 94 grams per kilometer.
“The pace of conversion to electric vehicles is only half of what we would need to reach the targets that would allow us to avoid paying fines,” de Meo, who is also President of the European Automobile Manufacturers’ Association (ACEA), said of the sector. Exceeding the CO2 limits can lead to fines of €95 per CO2 gram exceeded per kilometer multiplied by the number of vehicles sold. This could result in fines of hundreds of millions of euros for large car manufacturers. “Everyone is talking about 2035, ten years from now, but we should be talking about 2025 because we already have problems now,” he said. “We need to get some flexibility. It’s very, very dangerous to set deadlines and fines without having the possibility to make this more flexible.” rtr
