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German Industry Warns Of Bankruptcies & Relocations Over EU Climate Plans

Die Welt

The EU wants to speed up its climate plans. But member states are still arguing about how much additional burden consumers and companies should endure. The German Chambers of Industry and Commerce is making a strong appeal to policy makers, warning about high costs and damages.

In coming weeks, the EU’s climate policy for the next few decades will be decided. In September, EU member states, the European Parliament and the EU Commission want to decide how quickly Europe’s consumers and companies must reduce their emissions of greenhouse gases in coming years.

EU member states, with the exception of Poland, agreed in December that the continent should be climate-neutral by 2050. The decision was far-reaching, but politically comparatively simple, because the year 2050 is still a long way off.

Politically much more sensitive is the discussion that is currently being held between Brussels and European capitals: How fast should the EU move towards this goal?

The intermediate stages on the way to climate neutrality are decisive for the answer. So far, the EU has committed itself to reducing its greenhouse gas emissions by 40 percent by 2030 compared to 1990 emissions.

Brussels now wants to tighten this interim goal so that Europe can move more quickly towards climate neutrality.

Commission President Ursula von der Leyen has promised to tighten the targets. In the Climate Protection Act that the Commission submitted in March, however, only one option is given: it will be increased to 50 to 55 percent, it says.

No consensus in Brussels

But at the moment there is not even an internal agreement, not even parliament: The most recent meeting of the Environment Committee on Tuesday evening shows how divided the parliamentary groups are. A number of members want to raise the target to 65 percent.

Michael Bloss is one of them. “The European Parliament must demand a reduction target of 65 percent in the negotiations,” says the Green politician. “Scientists say this is the value that is necessary to keep global warming below two degrees. Everything else falls short. “

The conservative EPP Group sees it differently. “65 percent is unrealistic and unfortunately nobody has come up with a plan for how Europe should achieve them. And goals that cannot be achieved do not help the climate,” says the CDU environmental politician Peter Liese.

There is a similar discussion in the Commission. Vice-President Frans Timmermans, who is responsible for climate issues, wants to raise the reduction target to 55 percent. Other commissioners advocate 50 percent.

The member states are still fighting for a common position. Because Germany holds the EU Council Presidency, Environment Minister Svenja Schulze has to mediate. An agreement should be reached by the meeting of EU environment ministers on October 23.

In this complicated situations Germany’s main industry and business group has issued a warning. The German Chamber of Commerce and Industry (DIHK) warns decision-makers in Brussels and Berlin to think about the risk to the economy when setting stricter climate targets.

In an unpublished analysis seen by Die WELT, the trade and industry association outlined the consequences of stricter climate targets for Germany’s economy. More speed on the way to climate neutrality will inevitably lead to faster rising energy prices.

For many companies, this development, if it goes too fast, could threaten their very existence and lead to bankruptcy, the association warns. “In some industries, rapidly rising costs and stricter requirements could accelerate the structural change that is already underway to an extent that leads to irreparable structural breaks,” the authors write…

Feared loss of international competitiveness

What is certain, is that the price of carbon certificates will rise significantly if the CO2 reduction targets are tightened. If the target is tightened to 55 percent, the price for the certificates could even rise to 80 percent and the company’s costs to 49 million euros or 166 percent.

In view of these additional costs, economic opportunities are only possible if companies find the right framework conditions,” the deputy director of the DIHK, Dr. Achim Dercks explains.

For the German economy, this includes effective protection measures against distortions in international competition. Otherwise, relocation of industries to locations with lower CO2 costs will not benefit anyone – least of all climate protection. “

The business representatives also demand that with every tightening, the support of companies in international competition must also be adjusted.

This includes, for example, the free allocation of carbon certificates, the price of which should actually be reduced now, or compensation payments for energy-intensive companies. The EU Commission intends to limit these payments.

Translation GWPF

Full story (in German)