The implementation of a strategy to decarbonise the economy

By PETER ALTMAIER, German’s Federal Minister for Economic Affairs and Energy.

The new year has begun with good news: greenhouse gas emissions in Germany have plummeted, with the energy sector alone cutting around 50 million tonnes of CO2.

The carbon price, which Germany has now extended to the heating and transport sectors, will speed up this process. Our target of reducing domestic emissions in 2020 by 40 per cent over 1990 is thus within reach.

Meanwhile, renewable energy accounted for an encouraging 43 per cent of electricity consumption in 2019, and German power plants generated far less electricity from coal.

All of this shows that our climate change mitigation policies are working.

However, when taking decisions on energy policy, we have to make sure costs will not spiral out of control and there is broad public acceptance. That is why, in the context of the German EU Council Presidency in the second half of the year, we will seek to secure political backing from the EU for the transformation

The implementation of a strategy to decarbonise the economy processes taking place across the continent.

The opportunities offered by the energy transition have already been highlighted by the European Commission in its European Green Deal.

The EU’s target of achieving climate neutrality by 2050 is certainly very ambitious. Business is facing a simultaneous rise in investment, production, transport and energy costs.

This is why there are considerable risks with regard to carbon leakage and the loss of market shares in international competition. We must find answers to this problem before enshrining the climate target in law.

Energy-intensive industries will be particularly affected by the transformations entailed in the European Green Deal. I advocate far-reaching protection against carbon leakage, not only as regards direct emissions, but also indirect emissions that are due to electricity consumption.

All energy-intensive industries facing international competition should continue to enjoy comprehensive protection after 2020. The deliberations of the European Commission concerning the establishment of a “Carbon Border Adjustment Mechanism (CBA)” raise a lot of legal and administrative questions.

It is also still unclear how the new mechanism would relate to existing carbon leakage instruments that have proven successful and should be continued.

One of our tasks for the coming years is to strengthen cooperation both within Europe and internationally. We are, after all, unable to achieve the decarbonisation of our economy with German wind and solar power alone.

On the one hand, there is a lack of eligible land for these types of electricity generation. On the other, the manufacturing, heating and transport sectors also require green and synthetic fuels.

These can be more cheaply produced in areas outside Germany, such as in sunny North Africa or the windswept North Sea.

The way I see it, the Green Deal is a growth strategy for our economy that will allow us to access fast-growing markets and safeguard jobs with the help of innovations and new clean technologies.

We need to reconcile economic growth with ecological considerations.

Wherever possible, we ought to face increasing complexity by relying more on competition and the market. We ought to create an environment in which the best technologies and innovations can thrive.

This will give us an edge in research and development while making the EU fit for the future. Possibly, other countries will follow suit and replicate our approach to the energy transition.

This would deliver the greatest benefit in terms of global climate action.