International and national climate policy

Arguments and Positions

Climate protection is an essential concern of the chemical-pharmaceutical industry. The industry supports the European Union for achieving the global 2oC target 2050 and actively contributes to this with its products and by participating in European emission trading (ETS). At the same time, plans for a German climate protection legislation are becoming concrete. Here, it is important to bring the climate policy in a reliable shape and to avoid duplicate regulation. Furthermore, the national climate policy, too, should allow as much flexibility as possible in how the long-term climate goals are achieved.

Prevent national go-it-alone action

For the chemical industry, EU emission trading is a central instrument to reach climate goals while maintaining its competitiveness. ETS provides for a legally binding path to reduce emissions. As a result, EU-wide the industries falling under ETS will cut their emissions by 43% by 2030. Additional national measures need to give due consideration to existing European rules. Otherwise, national measures are counterproductive, inefficient and cause duplicate regulation.

Bring legislation in an industry-friendly form

The sectors of transport, agriculture, buildings and waste management are not part of ETS. Instead, they are covered by the "effort sharing legislation" at national level. A German climate protection act should only focus, if at all, on sectors not regulated under ETS. This act should not prescribe any legally binding climate goals for one or the other sector, in order to prevent the proverbial wave of lawsuits. In a climate protection act, goals such as energy supply security, high industrial value creation and job security must have the same standing and the same binding character as climate protection. Also, a climate protection act should not play off the relevant ministries against each other. The federal government's Climate Cabinet is a good first step towards achieving the goals for all sectors.

Monitor the coal phase-out

An early phase-out of electricity production from coal is part of the national measures to achieve the German climate goals. The recommendations of the Coal Commission bring major challenges for the chemical industry, as a gap in supply security and rising electricity prices are emerging. Therefore, measures for reliable supplies must be determined early. Also necessary is a compensation mechanism to ease for all power consumers the burden of rising electricity prices due to the coal phase-out.

The final report mentions "checkpoints" in the years 2023, 2026 and 2029 (i.e. moments in time when real developments are reviewed and compared with the forecasts). Sound review criteria need to be elaborated for such "Halte-punkte" to check supply security and electricity pricing. Depending on the outcome, the phase-out path might have to be adjusted accordingly.

THE VCI IS CALLING FOR THE FOLLOWING

  • No renationalisation of the European climate policy
    Industry and the energy sector are already regulated by EU emission trading; they reach their climate goals through this volume-based system. Additional national climate legislation for sectors regulated under emission trading is counterproductive, inefficient and ineffective.
  • No introduction of annual, enforceable sectoral targets
    Making climate protection legally binding would cause a wave of lawsuits, and policy-makers would no longer be the sovereign deciders in climate protection. Moreover, such annual, binding sectoral targets are not workable in practice due to factors such as economic development, state of the economy and long innovation cycles.
  • Ensure supply security and affordable electricity prices together with the coal phase-out
    A compensation mechanism that eases the burden on all consumers must be developed for electricity price increases due to the coal phase-out. Supply security should be defined and examined before the first shutdowns of coal-fired power plants. The federal government needs to appoint a person responsible for supply security. If the - still to be defined - criteria for checks at the "checkpoints" 2023, 2026 and 2029 are not yet fulfiled at those moment in time, this should at least bring a slowdown in the coal phase-out.

For questions or suggestions, please feel free to contact us.

Contacts

Jenna Juliane Schulte

E-Mail: j.schulte@vci.de