Europe must accompany carbon pricing with support for first movers in transition – German industry
Clean Energy Wire
Germany’s industry association BDI continues to support the move to climate neutrality and said that carbon pricing must be accompanied by support and the right regulatory framework to ensure a successful industrial transition across the EU.
“Simply making fossil-based production methods more expensive is not enough to drive the development of new, fossil-free infrastructure,” writes the association in a paper on growth-oriented economic and trade policy. “The development of new infrastructure must not come at the expense of the first movers – they should not be left to bear the costs of the ramp-up alone.” Especially in sectors with hard-to-abate emissions, companies require additional support, BDI said, but cautioned that such programmes must not become too bureaucratic.
The lobby group said there is “a growing tension between the necessary investments in transformation and the industry’s declining competitiveness,” as some assumptions regarding availability and market ramp-up have not yet materialised, for instance around the slow build-out of hydrogen infrastructure. Industry thus requires short-term relief measures, as well as structural reforms to the energy transition, it said.
BDI called for lower taxes and levies to lower electricity costs, and pointed to amortisation accounts as an example of the kind of tool needed: Companies receive government-backed loans to built infrastructure such as hydrogen grids during an initial phase with few customers, and pay them back years later, when more customers guarantee sufficient revenue.
Carbon pricing through the Emissions Trading System (EU ETS) is the cornerstone of emissions reduction policies in the European Union. The world’s largest carbon market sets an overall cap on greenhouse gas emissions from power generation, energy-intensive industry, and parts of aviation and maritime transport. The EU is currently updating the scheme to prepare for the years after 2030, but faces pressure from businesses and some governments to ease the burden on struggling industries. The EU is introducing a second system for emissions in buildings and transport, known as ETS 2, which is set to come into full effect in 2028.
The BDI threw its weight behind the move to climate neutrality with a landmark 2018 report, Climate Paths for Germany, and in 2024 said that green technology is Germany’s best bet to remain an industrial leader in the long term. The association now reaffirmed its support for the transition, writing that society’s responsibility towards future generations requires the end of emissions from fossil fuels worldwide. “A transformation of German industry without excessive short-term additional costs is therefore imperative.” However, it cautioned that “in industrial policy, new key objectives, such as climate neutrality, security and resilience, should not take precedence over the goal of growth and prosperity.”