German chambers of commerce call for climate policy revamp

One of Germany’s key business institutions, the chambers of industry and commerce, has called for an overhaul of climate policies to take pressure off companies.

“The current path of the energy transition in Germany is characterised by numerous, sometimes contradictory goals, detailed government control, insufficient European and international integration, and a lack of international coordination,” the organisation said in a climate policy paper adopted by its general assembly. “This has resulted in high costs and competitive disadvantages for the economy.”

German industry is struggling on many fronts, including with US tariffs, Chinese competition, red tape, and pressure to decarbonise. In particular, industries with a heavy use of energy in their processes such as steelmakers or chemicals have been under additional pressure due to price increases mainly for natural gas, following Russia's invasion of Ukraine. 

The DIHK represents nearly all German companies because membership is compulsory. Unlike business associations such as industry association BDI, the DIHK is not a conventional lobby group, but a public body with a legal mandate. The DIHK is the umbrella organisation for 79 regional chambers, which are expected to represent the entire business landscape, not the interests of particular sectors.

The paper notes that DIHK “has long been observing closures and relocations, particularly of energy-intensive production, and thus the loss of high-quality industrial jobs in Germany, particularly of energy-intensive production, and thus the loss of high-quality industrial jobs in Germany.”

“With its goal of becoming climate neutral by 2045, Germany has set itself a more ambitious target than the majority of industrialised and emerging countries. This will lead to significantly higher costs for German companies,” the paper says. To avoid competitive disadvantages, DIHK proposes “that German and European reduction targets should be aligned with the climate protection efforts of the most important economic competitors.”

DIHK calls for replacing strict annual climate targets

DIHK also said it opposed the strict annual climate targets laid out in Germany’s Climate Action Law, instead advocating a system that stipulates an overall budget of permissible emissions for a certain duration, but allows flexibility within that period.

Companies in Germany not only have to adhere to national regulation, but operate under a framework of EU rules. Adapting national targets would have to be complemented by changes at the European level. The EU-wide Emissions Trading Systems (EU ETS 1&2) set annually declining caps on emissions, which limits the flexibility for companies to emit more in the early years and less later.

Currently, the caps in the EU emissions trading systems are set to reach zero by 2039, and in the early 2040s respectively. However, this could change, as the EU and member states have begun talks to reform both systems and reached initial agreements.

The DIHK demands feed into this process. It said that emissions trading should “remain the central steering instrument of climate action.” However, it calls for “adapting it to the ambition of other economic regions” across the globe, without providing details. DIHK says that emissions reduction projects in third countries should be recognised in the existing EU emissions trading systems, and that companies should continue to receive free emissions allowances if the new carbon border levy (CBAM) proves effective.