European Green Deal: BDI presents its key recommendations for the upcoming EU “fit-for-55“ legislative proposals

In December 2020, the European Council endorsed a binding EU target of a net domestic greenhouse gas reduction of at least 55 per cent by 2030 compared to 1990. EU leaders aim at raising their climate ambition in a manner that should spur sustainable economic growth, create jobs, deliver health and environmental benefits for EU citizens and contribute to the long-term global competitiveness of the EU economy by promoting green innovation. Three core priorities move centre stage for BDI as the inherent Green Deal system challenges, complexities and global interdependencies of tackling climate change become apparent as well as the opportunities of eco-system innovation, innovative low carbon technologies and the transformative power of digitalisation:

1. Renewed and reinforced international cooperation will be key to hold the increase in global temperature rise and to strengthen industries´ global competitive edge.
2. An industrially strong and competitive Europe is the basis not only for a fair, inclusive and economically feasible transition but also for Europe to serve as a sustainable global rolemodel that others will wish to follow.An integrated innovation and investment programme for this decade is key.
3. Backing climate goals with a smart enabling framework and holistic mix of instruments requires a comprehensive, well thought-through toolbox at EU level.

Principles for a consistent, well-designed 2030 EU Green Deal reference architecture

A consistent, well-designed 2030 Green Deal reference architecture must be „fit-for-55“ at all levels – at political, economic, environmental and social level as well as at European and global level. In addition to the three above mentioned cornerstones, it should build on the following further principles:

• Sustainable energy as the backbone
• Accelerating building renovation
• Sustainable mobility for all
• A realistic, achievable EU environmental law and a market-driven circular economy
• Unlocking the potential of digitalisation for decarbonisation
• Building public acceptance

It's all about rapidly translating climate protection into new growth and business models - but how?

Climate neutrality 2050 - for German industry, this goal represents a time of unprecedented change. For a successful climate and energy future, old business models are being challenged and new ones are entering the market. To successfully tackle this societal project, a number of concrete Green Deal implementation measures will be crucial. In addition to an ambitious industrial strategy, BDI suggests, among other, reliable CO2 price signals at EU and global level, more speed, more harmonisation and more international cooperation for ramping up the hydrogen economy or massive investment into energy, transport and digital infrastructure.

The introduction of a harmonised classification and certification scheme of renewable and decarbonised gases through the review of the REDII, the integration of hydrogen networks into the new gas market regulation as well as the development of an import strategy for climate-neutral energy sources in cooperation with international partners will all play a decisive role in the view of BDI.

In addition, BDI recommends setting the EU framework for the efficient market ramp-up of alternative drive systems (BEV, PHEV, FCEV) and fuels (hydrogen, e-Fuels, advanced biofuels)and their charging and refuelling infrastructures, including appropriate framework conditions for the market ramp-up of hydrogen and Power-to-X technologies. The revision of the EU Emissions Trading Scheme should start with separate schemes in case of an extension to other sectors, especially as far as the transport and building sectors are concerned.

Industry will also need reliable support for the transformation, since concrete comparably ambitious climate measures will still have to follow the rather general climate commitments of Europe´s international trading partners. Therefore, BDI advocates for not abruptly replacing the proven EU-ETS carbon leakage instruments by untested border adjustment measures.

Lifting climate and energy diplomacy to the next level

Above all, however, an active European climate and energy diplomacy should be pursued, such as to carry forward a transatlantic pact for climate neutrality, including a new alliance for green tech. Efforts to create an effective and efficient instrument under the umbrella of Article 6 of the Paris Agreement need to increase, and a new strategy for international energy engagement and a new Africa-EU Green Energy Initiative would also support Europe's transition to a hydrogen economy while creating new mutually beneficial energy cooperation and alliances.