New EU climate target proposal concern for German industry and NGOs
German politicians and industry have warned that a new, more ambitious EU 2030 climate target could overburden the bloc’s largest economy. Environmental NGOs, on the other hand, said the proposal to increase the target to at least 55 percent greenhouse gas reduction presented by European Commission President Ursula von der Leyen is not enough to meet Paris Climate Agreement goals.
German industry said that the new targets could overburden businesses, especially in the face of an economic crisis caused by the coronavirus pandemic. Dieter Kempf, president of German industry association BDI said that tighter climate targets “pose enormous challenges for the economy and society, with an uncertain outcome and in the midst of the biggest economic crisis since WWII.” He said increasing the target to 55 percent would mean member states had to increase climate efforts fivefold, without elaborating on this. He called for a tool box of instruments on how to implement the new target. “A massive increase in carbon leakage protection and lead markets for climate-neutral products are needed.”
The announcement on tightening the climate target is “not yet a growth strategy”, said Achim Dercks, deputy managing director of the Association of German Chambers of Commerce and Industry (DIHK). Companies in Germany will have to expect much higher CO2 costs and stricter requirements, said Dercks. "All the more reason why companies need large quantities of affordable and climate-friendly energy such as renewable electricity and low CO2 hydrogen.”
"Europe can confidently set a higher climate target," said federal environment minister Svenja Schulze, representing the German Council presidency. "The Commission has very good arguments for a new target of 55 percent. It is now up to the member states to take a position on this proposal." Schulze added she has invited climate and environment ministers to Berlin to discuss the Commission’s proposal at the end of September. "I hope that we can find common ground at this meeting," said Schulze.
In March 2020, the European Commission proposed the European Climate Law, which would make the goal of climate neutrality by 2050 legally binding. Another element of the law – for now left blank – will be a more ambitious EU greenhouse gas reduction target for the year 2030. This would be Europe’s contribution to global efforts to meet the goals of the 2015 Paris Agreement.
European Commission president von der Leyen proposed to increase the target to "at least 55-percent" during her State of the European Union address on 16 September. Details on how to get emissions down to that target will be presented on 17 September, said Executive Vice-President for the European Green Deal Frans Timmermans in a message on Twitter.
The Commission justifies the rise as needed for “a balanced, realistic, and prudent pathway to climate neutrality by 2050,” it says in a leaked draft document seen by Clean Energy Wire. It says a forthcoming impact assessment will demonstrate “that an emissions reduction of 55 percent by 2030 […] is both economically feasible and beneficial for Europe”, but current policies are insufficient. The European Parliament and – more importantly – member states have yet to debate the target before the EU makes a final decision, planned before the end of the year.
The Commission says that the buildings and power production sectors can make the largest and most cost-efficient contribution to reaching a new target, whereas transport would make a smaller contribution. It also plans to fully take into consideration land use and forestry emissions in reaching the new target. The Commission sees emissions trading as a key instrument and aims to expand it from the power sector and certain industry emissions to transport and buildings. Under the current policies, the EU Emissions Trading System (ETS) covers the energy sector and parts of industry and aviation. Climate action in the other sectors is governed by the EU Effort Sharing Regulation, where each member state has been assigned an individual greenhouse gas reduction target.
Germany’s automakers criticise EU Commission climate plan
The German Chemicals Industry Association (VCI) said the proposed target is “extremely ambitious” and needed measures to ensure products from European energy-intensive industry remained competitive in the world. On plans to focus on the ETS in raising the target, VCI cautioned: “The higher the EU sets the bar for the ETS sector, the higher the costs for energy-intensive industries like chemicals.”
Another bitter pill for German industry is a plan to further tighten passenger car emission limits. The Commission is set to propose that in 2030, average carbon dioxide emissions of new cars should be 50 percent below 2021 levels. The bloc’s current plan is for a 37.5 percent reduction in 2030, with respect to 2021 levels.
Hildegard Müller, president of the Association of the Automotive Industry (VDA), told Handelsblatt that with the “short-term, massive tightening of CO2 targets, Europe is taking a path that is too risky.” She said government interventions that made it impossible to meet “corporate goals” could lead to “painful job losses.” Müller said that it was “regrettable that the EU Commission obviously does not take into account the worsening economic situation of the industry as a result of the corona crisis.” Müller also pointed to bottlenecks in technology, such as charging stations and batteries, saying that anyone who wants to achieve the climate targets should stay open to modern combustion engines, hydrogen and e-fuels.
Transport minister Andreas Scheuer said a “balance between reason and tightening” targets had to be struck. “I believe that sending the wrong signals to the world with exaggerated values would create uncertainty in the economy,” he told news agency dpa.
Stephan Weil, Social Democratic (SPD) state premier of Lower Saxony, home to automaker Volkswagen, said existing targets already challenge German industry. “We must not go too far or, in the worst case, large industrial sectors and thousands of jobs will fall by the wayside while CO₂ emissions rise in other countries,” he told Funke Mediengruppe.
Agreement with Eastern EU states only possible if Germany significantly raises national target - researcher
While the EU is on track to overshoot its current emissions reduction target of 40 percent, raising it to more than 50 percent would require significant additional efforts by member states. Talks on the exact target, which the German Council presidency aims to facilitate and bring to a conclusion by the end of the year, could become quite a challenge. Certain Eastern European countries, which rely on traditional polluting industries and face a hard time dealing with the economic and social transition necessary in order to become climate neutral, have been especially sceptical.
“What exactly lies ahead for Germany will only become clear in the coming months and will remain the subject of intensive negotiations,” said Felix Schenuit, researcher at Universität Hamburg. He emphasises that if Germany supports the EU-wide 55-percent proposal, the government will have to make a greater effort at home, also in order to persuade eastern neighbours. “An agreement with the Visegrad states [Czech Republic, Hungary, Poland and Slovakia] in the European Council is – if at all – only possible if Germany significantly raises its national target of currently 55 percent. It is not least because of the Council presidency that all eyes are on the German government,” Schenuit told Clean Energy Wire.
Since Germany sits among the more ambitious and wealthy countries in the union, it has been expected to do more than others. Many experts therefore see a national 55-percent target as insufficient contribution to an EU-wide 55-percent target.
As climate targets are so political and have such far-reaching implications, in the past it was always necessary to get the endorsement at the highest political level (European Council) to be able to agree. We expect it to be the same this time.
The decision-making process to agree a new 2030 target is complex. It is tied to the climate law procedure, which requires the Commission, member states in the Council and the European Parliament to find a compromise in so-called trilogue talks. The environment committee of the European Parliament has come out in favour of a 60 percent reduction and a full plenary vote is scheduled for October. However, a lot of de-facto decision-making power regarding the exact target lies with the member states.
A Council spokesperson told Clean Energy Wire the institution hopes that EU leaders agree on an updated 2030 target as early as the European Council meeting on 15 October. “As climate targets are so political and have such far-reaching implications, in the past it was always necessary to get the endorsement at the highest political level (European Council) to be able to agree. We expect it to be the same this time,” the source said. In that case, environment ministers could include the target in a joint position on the full climate law at their next formal meeting one week later (23 October).
However, it is unclear whether the heads of state and government will already reach an agreement or even talk about the climate target at the mid-October meeting, as dissent is still great and other pressing issues such as Brexit loom large. Talks could well drag on until the end of the year, as the heads of state and government are scheduled to meet again in mid-December.
"I think it is quite unrealistic for leaders to find an agreement at the European Council in October," said Oliver Geden, senior fellow at the German Institute for International and Security Affairs (SWP) and a lead author of the Intergovernmental Panel on Climate Change IPCC’s Sixth Assessment Report. "Perhaps it is part of the Commission's strategy to publish the impact assessment now, two weeks earlier than originally planned, so that Poland and other countries cannot claim in mid-October that they have not yet had time to assess it," he told Clean Energy Wire.
NGOs warn against focus on emissions trading, caution regarding inclusion of land use and forest emissions
German NGOs have welcomed the debate about higher targets and generally called for more ambition than in the European Commission proposal, as 55 percent is not yet in line with Paris Agreement goals. Most organisations have called for an emissions reduction of at least 65 percent since the Commission published its climate-law draft earlier this year.
Lutz Weischer, head of policy at Germanwatch, takes issue with the Commission’s choice to strengthen emissions trading at the expense of the current effort-sharing system. “We warn against abandoning the effort-sharing regulation carelessly, because it very clearly defines responsibilities and says what happens if goals are not achieved,” he told Clean Energy Wire. “It is the only instrument with immediate financial consequences. This should not be given up carelessly.”
However, the choice could also have benefits. SWP’s Geden told Tagesspiegel Background that it could be a “wise approach politically” to bet on emissions trading. Negotiating new fixed reduction targets for the member states in the effort-sharing regulation is considered to be difficult to achieve. "This conflict would then be defused", said Geden.
Another element NGOs have criticised is the Commission’s plan to include the land-use and forest sector in the new target. While it is yet unclear how exactly this influences the target, it looks likely to take pressure off other areas, as the sector EU-wide today net-absorbs more emissions than in 1990. According to the Commission draft, implementing current policies would lead to an emissions reduction of around 45 percent by 2030 when excluding land-use emissions and absorptions, and around 47 percent when including them.
“This 55-percent target is a sham,” said Kai Niebert, president of the umbrella organisation of German environmental NGOs (DNR). “Only a real 55-percent target could be seen as real climate action.” Niebert said that it remained to be seen what exactly the 55-percent target means, as the Commission planned to reveal details only on 17 September.
Debate over tighter EU 2030 climate target foreshadows tough implementation talks in Germany
While it is still open what exactly the proposal means for German efforts, one thing seems all but certain: Germany will have to overhaul its 2030 climate action plan, on which it decided only at the end of last year.
“The agreed climate action plan 2030 already misses the previous, much less ambitious EU target,” said researcher Schenuit. He points to difficult talks in a difficult political landscape next year.
“The debate is likely to become uncomfortable for coalition members in the federal government - even beyond this year,” he said. “Negotiations on how the target can be achieved in concrete terms will drag on into next year: A federal election year in which the Greens will be considered the kingmakers for the next government.”
Reactions from Germany:
Federal environment minister Svenja Schulze, representing the German Council presidency, said: "The Commission has very good arguments for a new target of 55 percent. It is now up to the member states to take a position on this proposal. I have invited the European climate and environment ministers to Berlin to discuss the Commission’s proposal at the end of this month. I hope that we can find common ground at this meeting. During the German EU Council Presidency, one of our main goals is to maximise our progress in climate action.“
Green parliamentary group leader Anton Hofreiter told Zeit Online in an interview that 55 percent is “the minimum”. He said his worry is that the EU will not succeed agreeing on a new 2030 target before the end of 2020. “Hence my urgent appeal to the German government to exert pressure at European level so that climate policy is put on the table at the next [European Council] summit in October.”
Business and energy industry
Dieter Kempf, president of German industry association BDI said that tighter climate targets “pose enormous challenges for the economy and society, with an uncertain outcome and in the midst of the biggest economic crisis since WWII.” He said increasing the target to 55 percent would mean member states had to increase climate efforts fivefold, without elaborating on this. He called for a tool box of instruments on how to implement the new target. “A massive increase in carbon leakage protection and lead markets for climate-neutral products are needed.”
The announcement on tightening the climate target is “not yet a growth strategy”, said Achim Dercks, deputy managing director of the Association of German Chambers of Commerce and Industry (DIHK). Companies in Germany will have to expect much higher CO2 costs and stricter requirements, said Dercks. "All the more reason why companies need large quantities of affordable and climate-friendly energy such as renewable electricity and low CO2 hydrogen.” In addition, the businesses hit by the coronavirus pandemic first and foremost needed the financial leeway for the investment in new technologies and processes required for the transition. "So far there are too few practicable answers for these mammoth tasks.”
German energy industry association BDEW head Kerstin Andreae said 55 percent is a “very ambitious” target. “It can only be achieved if the necessary framework conditions are created.” The BDEW calls for more speed in the expansion of renewable energies and grid development, the creation of a European hydrogen market and stronger sector coupling.
The German Renewable Energy Federation (BEE) said the Commission’s proposal is a “first step”, but said 60 or 65 percent would have been necessary. “This would have also increased the chances for a rapid transformation of the EU economy, which must compete internationally for clean technologies,” said BEE president Simone Peter. The Commission is right to show that, with a more ambitious target and an increasing share of renewables and greater efficiency, the EU's export dependency can be reduced, security of supply increased and the high costs of further delaying climate action efforts avoided.
Local utilities association VKU said a tighter EU climate target offered both “great opportunity” and “enormous challenges” for municipal energy suppliers. VKU president Michael Ebling said the Commission proposal still lacked details on how the EU would set framework conditions to enable local actors implementing the right policy and projects. “Efficient mechanisms are needed to enable competition for the best innovations and solutions,” he said and called expanding the ETS to other sectors an important approach. Ebling said plans for a higher 2030 EU target must already be reflected in current reform plans for the German renewables law (EEG).
Stefan Thimm, managing director of German offshore wind farm operator association BWO, welcomed the Commission’s decision and said it was inevitable in order to reach CO₂ neutrality by 2050. “Offshore wind energy will make an important contribution in this regard.” Thimm called on the German government to use the momentum and create the necessary planning and financial security for offshore projects.
The Commission’s proposal is a “consistent step towards achieving carbon neutrality by 2050,” said Sebastian Rausch, head of the Centre for European Economic Research (ZEW) research department “Environmental and Resource Economics, Environmental Management”. Rausch warned, however, that implementation should now become the focus. “The stricter climate targets will require the existing architecture of European climate policy to become more flexible in order to minimise economic costs and avoid undesired distribution effects within and between EU countries.”
Setting ambitious goals is not enough, but the implementation is important, writes Thilo Schaefer of private industry-sponsored German Economic Institute (IW). Schaefer cautions regarding the planned carbon border adjustment mechanism: “Although this will make all imported products with a high CO2 content more expensive in Europe, it will also make those that are exported more expensive. In addition, exporting countries could impose tariffs on European products.”
Kai Niebert of environmental NGO umbrella group DNR said that it remained to be seen what exactly the 55-percent target means, as the Commission planned to reveal details only on 17 September. “At the same time, this step is not yet what we need to effectively and reliably limit the climate crisis to 1.5 degrees Celsius. This would require at least 65 percent,” said Niebert.
Commission president von der Leyen has struck the right note and “convincingly demonstrated that she is ready to fight for a stronger EU climate policy,” said Germanwatch policy director Christoph Bals. "That is what we will judge her on.” What mattered now is how the instruments for implementing the targets are designed in concrete terms and introducing an international strategy for which a credible implementation of the climate targets in Europe can have a leverage effect.
Climate-Alliance Germany criticised as “irresponsible” that the Commission had not made an impact assessment on scenarios reducing emissions by as much as 65 percent. “Nevertheless, the EU is today one step closer to its promise to take climate protection seriously,” said managing director Christiane Averbeck, and called for a “clear catalogue of measures” to implement the higher target.
Sven Harmeling, head of climate policy at CARE International, welcomed the idea to raise the EU target, but said 55 percent are “simply not enough” to reach Paris Agreement goals. “Droughts, floods, as is currently the case in Yemen and Sudan, or severe hurricanes are already threatening millions of livelihoods in poorer regions of the world. The major industrialised countries of the EU are also partly to blame for these conditions.”
Greenpeace’s climate expert Lisa Göldner said it is high time the EU raises its 2030 target as the climate crisis was getting worse. However, von der Leyen’s proposal is “too little”, as it will not ensure the bloc reaches Paris Agreement goals. “From a climate science perspective, it is necessary to reduce CO2 emissions by 65 percent by 2030.” She said chancellor Merkel must now use the German EU Council presidency “to drive forward the serious transformation towards a climate-friendly economy.”