Only a few hours after European Commission President Ursula von der Leyen proposed a new climate target for 2030 in her State of the Union address, her Vice-President in charge of climate action, Frans Timmermans, yesterday answered questions from German industry representatives at the BDI climate conference in Berlin.
During the conference, German industry representatives clearly voiced scepticism.
The increase of the current target for 2030 by a further 15% would mean a roughly fivefold increase in the efforts of the 27 EU member states, BDI President Dieter Kempf emphasised at the beginning of his speech.
And according to BDI calculations, Germany alone would have to invest €2.3 trillion to achieve climate neutrality by 2050. “You can work out who of the other 26 countries can afford to do this. The level of ambition not only differs greatly within the EU, but also globally,” said Kempf.
The Commission’s target is feasible, but close to “over-ambitious,” he added.
Hildegard Müller, President of the German Association of Automotive Industries (VDA), was also critical: “If we commit ourselves to our target for 2050, this means a 50% reduction in fleet limits by 2050, by which time around 60% of new cars sold in Germany would have to be electric,” said Müller.
In the first months of 2020, the share of electric cars sold on the German car market was 9%, which is 1% more than the EU average.
Müller also emphasised the lack of support from politicians. According to him, the expansion of charging points had progressed only about half as fast as the sale of electric vehicles, and German industry was operating on energy prices that were not internationally competitive.
In his reply, Timmermans affirmed that he would “personally commit himself to ensuring the Commission works closely with all sectors of industry to implement the Green Deal.”
Emissions certificates for the road transport sector?
Today, the Commissioner will officially present the Commission’s impact assessment, the details of which have already been released to the press in recent days.
From the European Commission’s point of view, there is no doubt that reducing CO2 emissions and economic growth are not mutually exclusive. “Last year, EU emissions fell by 25% compared to 1990, while the economy grew by 63%,” said Timmermans.
To meet the new climate target by 2030, the European Commission estimates that the share of renewables would have to more than double. And to further reduce greenhouse gases, so-called carbon sinks and reservoirs will also be used.
At present, however, there is no such project on an industrial scale in the EU. By next June, the Commission also wants to review the extent to which the EU emissions trading system (EU ETS) can be expanded.
On Tuesday, the European Parliament supported the Green Deal proposal to include shipping in the EU ETS. “But we are also looking at whether and how buildings and the road sector can be brought into the trading scheme. This could be done in stages,” said the Dutchman.
Especially with regard to the transport sector, where emissions are to be reduced by 90% by 2050, there is still a lot of potential for reducing emissions.
However, the aim is to also act in a technology-neutral way – there will be no focus on electric mobility or even a ban on combustion engines.
Timmermans: Natural gas remains “incredibly important”
What remains open, however, is the question of which interim solutions will be used to decarbonise the economy. Timmermans said that natural gas would probably play “an incredibly important role, even if this is controversial in the environmental field.”
If it were possible to convert existing infrastructure such as pipelines to handle an ever-increasing amount of hydrogen, the investment costs of the infrastructure could be reduced by three quarters.
But for now, there is no economically viable model for the use of green hydrogen, industry representatives said.
Especially when it comes to the steel sector that depends on large quantities of the climate-neutral gas, conversion is proving difficult because electrolysis is only just being tested on an industrial scale and is still very costly.
“We therefore need three things: the provision of sufficient capital, large quantities of renewable energy sources at competitive prices, which we do not have at present, and effective protection of foreign trade,” said Tim Hartmann, Chairman of the Board of the steel group Dillinger und Saarstahl.
In the case of steel, Hartmann said that either a green market had to be created within the EU or a carbon price floor had to be introduced to compensate for cheap steel imports from China.
“The current system of benchmarks, i.e. import restrictions, is totally inadequate,” he added.
Commission wants controversial border tax
Plans for a carbon border tax at EU level are highly controversial in industrial circles, however. Such a mechanism is “nothing but protectionism,” said VDA President Müller, who asked “how many such instruments can we afford in a global market.”
The European Commission, for its part, is currently examining how the taw could be implemented. It is important that it is “targeted, not blanket”, said the Commission Vice-President. Such an instrument would be available in future, even though “the steel sector will have a few difficult years ahead.”
For Ottmar Edenhofer, a climate scientist and director of the Potsdam Institute for Climate Impact Research (PIK), the solution to maintaining competitiveness in the short-term lies in bilateral agreements. The EU should provide countries in Southeast Asia with cheap loans and attach climate policy conditions to them, for example by promoting a coal phase-out.
Meanwhile, within the EU, the EU ETS should be reformed structurally so as to avoid growing price differences between sectors covered and not covered by the EU ETS. Yet according to Edenhofer, simply defining new climate targets would not achieve the goal, but would only increase the risk of carbon leakage.