Climate package "Fit for 55": Innovation as Europe’s Climate Action Springboard

Following the EU institutions' historic agreement on Europe's first climate law, the European Commission recently presented its Fit for 55 legislative package mid-July 2021. Europe´s climate debate thus moves on from “how much to do” to “how best to achieve it” – and rightly so.

With the goal of becoming the world's first climate-neutral continent, Europe wants to make a significant contribution to achieving global climate targets. With an industry that is strong in investment and innovation, as well as its economically viable technologies, it is also well positioned to do so – actually far beyond its own emission levels.

On the occasion of the joint webinar "Energy transition: challenges and opportunities for European industry”, which was opened by European Energy Commissioner Kadri Simson and gathered Members of the European Parliament as well as German, Italian and French industry representatives, the BDI and its Italian and French counterparts Confindustria and Medef launched a joint call for European energy and climate innovation leadership.

With their initiative, the three leading industry associations show their clear commitment to go beyond national particularities and work together to transform business models and to develop solutions to reach the objectives of the clean energy transition. They will further deepen their cooperation at their next trilateral business forum in fall 2021.

Ten trinational recommendations for action

In their joint ten recommendations, German, Italian and French industries prioritise technology open pathways to net-zero building on even stronger industrial ecosystems, as well as accelerating the deployment of existing CO2-neutral and the development of further technologies.

Massive investments in the expansion and modernisation of energy, transport and digital infrastructures will be of vital importance for Europe as an attractive business and industrial location. Europe should lead in scaling the EU and global hydrogen economy, according to the joint position.

The role of hydrogen in the transition to a sustainable industry

In a panel session regarding the role of hydrogen chaired by BDI Deputy CEO Holger Lösch, Mr. Joaquim Nunes de Almeida, Director in the Directorate General Growth, presented the revised industrial strategy considering Europe's innovation and investment power and the importance of ramping-up of the EU hydrogen economy.

In addition, Ismail Ertug MEP, Vice-President of the S&D Group and EP Rapporteur on the EU Sustainable Mobility Strategy, stressed the need to scale up and invest in new technologies and raised important climate financing topics.

Participants agreed on the need to ensure the availability of renewable energy in abundance and at competitive prices in an integrated, modern and low-carbon energy system that both, building the hydrogen economy and decarbonising industry can progress.

However, securing and enhancing the global competitiveness of European industries in the future depends on a global carbon pricing roadmap and a common price for 2030 at least at G20 level.

EU Emissions Trading System reform – quo vadis?

The second panel session focused on the cornerstone of the EU´s climate policy, the reform of the EU Emissions Trading Scheme (ETS). Ms. Mette Quinn, Head of Unit in Directorate General for Climate Action, presented the European Commission's thinking on, among other, the introduction of a CO2 price for road transport and buildings, as well as the interconnections between existing ETS carbon leakage protection measures and the forthcoming new carbon border adjustment mechanism. To address the investment challenge, the European Commission plans to strengthen the ETS Innovation and Modernisation Funds, she stressed.

Dr. Carsten Rolle, Head of BDI's energy and climate department, underlined three key principles for ETS reform from an industry perspective:

• "Do not disturb": the new regulation of the EU ETS should not interfere with the existing system for electricity and industry
• "Keep triggering innovation": ETS revenues should continue to be used for the modernisation of the sectors concerned and be reinvested in climate protection and energy-saving projects
• "Think global": it is essential to make progress regarding CO2-pricing at global level

Global Race in Climate Innovation

A strong and innovative industry is a prerequisite for Europe to win the global race in climate innovation and digitalisation with its own technologies and concepts on par with the US and China.

At the same time, it became clear that a strong industrial base is also Europe's catalyst for an energy and climate turnaround without jeopardising Europe's high level of economic and social cohesion and the well-being and prosperity of its citizens.