August 31, 2016

The economic consequences of the Paris climate deal

At the Paris climate conference in December 2015, some 195 countries reached the first-ever legally binding agreement to cut emissions that contribute to climate change. The agreement has fuelled the debate on future climate policies in Germany and Europe.

On 28 July, 2016, the Bavarian Industry Association (vbw) welcomed around 110 experts from business, sciences and politics in Munich to discuss the consequences of the Paris climate deal for Germany and Bavaria, in particular regarding economic competitiveness.

All states must commit to ambitious emissions reductions

Ahead of the event, Bertram Brossardt, Chief Executive Officer of the vbw, called the Paris agreement “a good basis for climate justice”. However, he said that the real work will start now.

In order to decrease global warming to well below 2°C, he added, all participating countries must now commit to ambitious targets – in particular those who account for the majority of global greenhouse emissions.

Germany and the EU have demonstrated how combating climate change can be reconciled with economic growth and increased industrial output. Between 1990 and 2014, Germany managed to reduce its greenhouse emissions by 28 percent, and the EU by 23 percent.

Given Germany’s great success in meeting its efficiency targets, Brossardt rejected to increase the burden on German industry even further on a unilateral basis.

Ensuring affordability and security of supply

The potential economic consequences of the Paris agreement where also highlighted by Markus Ferber, Member of the European Parliament in the conservative European People's Party.

Ferber said that Bavarian companies, thanks to their experience in resource efficiency technology and special machinery, envision benefits by providing developing countries with these technologies so that they can meet their targets.

At the same time, Ferber warned against over-ambitious climate and energy policies which could drive industrial production into countries with lower environmental standards.

A major breakthrough for the Paris agreement would be an early ratification by the United States. At the event, Jennifer D. Gavito, U.S. Consul General in Munich, expressed her confidence that the U.S. could ratify the agreement by the end of this year.

Germany’s leading role in fighting climate change

The German industry’s view was represented by Dr. Dieter Gilles of Wacker Chemie AG and Rainer Häring of UPM GmbH, who both underlined Germany’s leading role in reducing carbon emissions and improving energy efficiency.

However, they also warned that the innovative strength of German companies depends on their competitiveness. Above all, Germany’s future climate policies must take into account the economic interests of German companies – and ensure a stable and long-term framework for investments and planning.