Professor Dirk Messner. Photo: DIE.
03 Dec 2015 | Kerstine Appunn

COP21 Interview: Next innovation wave in economy will be “green"

The final negotiations for a global climate treaty have kicked off in Paris. What is the German perspective on an international climate agreement and what has the energy transition (Energiewende) got to do with it? The Clean Energy Wire talks to German businesses, researchers, negotiators, politicians and activists who have stakes in the talks. Today: Dirk Messner, Director of the German Development Institute (DIE) and Co-Chair of the German Advisory Council on Global Change (WBGU).

CLEW: What would you consider to be a successful outcome of the Paris climate conference?

Dirk Messner: There are four key elements. The first is the review and monitoring mechanism to ensure that signatory states will actually implement the pledges that they have made. The more precisely this review mechanism is constructed, the more precisely we can measure and review that everybody is heading in the right direction. If this mechanism is too loose and lets states report unsystematically and without fixed benchmarks then we will have a big problem.
The second key factor is that a long-term goal is agreed. Ideally, this would be called ‘decarbonisation of the world economy’, at best by 2070. But I would also be satisfied if it says ‘in the second half of the 21st century’, so that businesses and society know that this is the target that we are aiming for.
Thirdly, it will be very important that decisions are made on adaptation to climate change to make sure that we get developing countries on board. The fourth key element is the provision of climate finance for developing countries.
If we leave Paris, saying "now it's done. Let's meet again in 2020", this would be a failure. If we leave Paris arguing "this was the starting point to decarbonise the global economy, let's start tomorrow morning to accelerate the transformation" – then we would have a chance to stay within the 2 degrees corridor.

What do you think are the biggest challenges in the process?

We will achieve the goal of US$100 billion in climate finance annually by 2020. I am not worried about that, but I am concerned about the long-term goal not getting approved. If we don’t agree on a long-term target we will end up focusing solely on the pledges that countries have made so far and that is not enough. This is probably the most contentious issue. When it comes to the exact design of the review mechanism, opinions are also still very diverse.

How important is it that the long-term goal is called “decarbonisation” in the final agreement? Would it matter if it was called “climate neutrality”, as the European Union phrases it?

It’s important that we achieve a climate-compatible global economy. If I was to choose a term that is not ‘decarbonisation’ it would be ‘climate-compatible economy’, meaning that we have to reduce our emissions to almost zero by 2070. The problem with the term ‘decarbonisation’ is that a range of countries who have large coal deposits would want to solve this problem by using carbon capture and storage (CCS). This is a hotly disputed technology in Germany, but I think it would be appropriate for such countries, including Poland and India. If countries want to keep burning coal they should better do it with CCS and not without it.

If there is agreement on decarbonisation of the global economy or climate neutrality, how can Germany and the rest of the world benefit from it financially?

In the long-term, we will gain a stable energy system that will be very cheap to run. Studies show that the initial investments in such a system are high, as is the case for every new technology. But once the infrastructure is there, energy resource costs will be low or non-existent as they will be mostly wind and sun. Only the infrastructure will have to be paid for.
The second element is that the transition to a renewable energy system involves a massive investment programme for all national economies. Those countries that are now making large investments are going to be success stories when it comes to economic growth and jobs.

In an industrialised country such as Germany, where industries like car manufacturing are an important part of the national economy and have great influence, how can the state shape this transformation without alienating industry?

In the German energy system we can see large growth dynamics in the renewables sector, leading to more jobs in this area. Renewables are a very fast growing investment sector in the German economy, but also internationally.
In the car industry, it’s all about inventing a new engine system. Electro mobility could be the equivalent of renewables in the energy sector. The German car industry has to make sure that it will not miss the boat in this area because others, such as China, are moving very fast. Due to its air pollution problem, China is  embracing e-mobility much more quickly than Germany, which risks being left behind. Germany has a traditional, very influential and technically highly skilled industry, but with an old engine system. It has to get its act together.
In all other areas of industry, energy efficiency is key and Germany is strong when it comes to efficiency and environmental sustainability. This is down to Germany’s relatively strict and progressive environmental policy over the past 40 years. Many companies at first considered this a threat but it has strengthened the resource and environmental efficiency in the German economy. And: the next innovation wave in the global economy will be “green”.

You’ve mentioned that environmental legislation can be considered a threat by companies. This is also why energy-intensive industries in Germany, such as the power and steel sector, are calling for a ‘level playing field’ to make sure that climate action, for example in the form of a price on carbon, is implemented worldwide so that it doesn’t disadvantage companies in certain countries. Should German companies be afraid of carbon leakage?

I don’t think the German economy should be afraid of de-industrialisation. We can see that the German economy is faring well in the transformation to renewable energies. One example is the German steel industry: ThyssenKrupp is working hard to develop a low carbon business model, aiming at using CO2 as a resource for producing chemicals in the future. But of course the call for a level playing field is very reasonable. It doesn’t help if we make strict energy efficiency rules for the steel industry in Germany or implement a price on carbon if this leads to the German industry closing down its production in Germany just to re-open it in India.
It doesn’t matter to the climate where the emissions come from. That’s why a global price on CO2 emissions would be very reasonable, because it would prevent distortion of competition. We won’t achieve this in Paris but we will definitely have to work on this after COP21, for example by discussing the union of emissions trading systems of large economies such as Europe and China. If we connected those two alone we would cover 60 percent of world exports. That would be a step in the right direction to shaping a common market for emissions.

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