Fit-for-55: Quo vadis?
Delayed by one year due to the COVID-19 pandemic, the World Summit of Heads of State and Government on the implementation of the Paris Climate Agreement takes place in Glasgow, Scotland, from 1 to 12 November 2021. What is at stake? Global climate targets are to be aligned with the Paris path, global efforts to adapt to the consequences of climate change are to be intensified and contentious financing issues need to be clarified. Finally, the Paris Agreement's "rulebook" is negotiated to track each Party's progress in implementing its "nationally determined contribution" and to ensure the transparency and environmental integrity of international carbon markets.
In any case, the urgency for global action could not be more imminent – for both, the global climate and a sustainable, European industry. After all, industry´s competitiveness depends on fair framework conditions, and climate protection would not be served if the global competitiveness of European industry were sacrificed in the transformation.
No stabilisation of the global temperature trend
The latest UNFCCC synthesis report shows that the current nationally determined contributions will not suffice to realise the goals of the Paris Agreement. We are heading for a global warming of 2.7°C.
In its flagship publication "World Energy Outlook 2021", the International Energy Agency (IEA) also describes a somewhat modest outcome of efforts of the global community so far: today's climate protection pledges actually cover less than 20 percent of the emissions reduction gap that would have to be closed by 2030 to keep the 1.5°C mark within reach.
More needs to be done, and can be done, even cost-efficiently. Alongside a push for clean electrification, energy efficiency or reductions in methane emissions from fossil fuel use, the IEA is focusing on clean energy innovation. And rightly so: the pledges announced today fall short of what is needed in terms of scaling the hydrogen economy, or the deployment of hydrogen-based fuels, other low-carbon fuels or carbon capture, use and storage (CCUS).
Moreover, there is a threat of further turbulences in the energy market. The world is not investing enough to meet its future energy needs, according to the IEA, and uncertainty over policy and demand trends pose high risks for a volatile future of energy markets.
And meanwhile in the EU....
The EU is counting on its pioneering role in the ecological turnaround. Also in the face of rising energy prices, it sees the long-term solution in the green transformation. Accordingly, the Fit-for-55 implementation package of 14 July is not only intended to achieve the 2030 climate target, but also to increase Europe´s long-term resilience to future energy price shocks. The European Commission's "toolbox" of countermeasures to rising energy prices is intended to counteract the social hardships of the energy crisis in the short term as well, thereby promoting both political and social acceptance for the Fit-for-55 package.
Although a bold step, more is needed for Europe to become a climate-neutral industrial continent. Continuous access to sufficient quantities of renewable energy and sustainable fuels at competitive prices must be guaranteed, and an investment programme in modern energy, transport and digital infrastructures is needed. Planning and approval procedures must be urgently streamlined. The hydrogen market ramp-up, in turn, requires more speed, more harmonisation and more international cooperation. Considering widening international climate ambition gaps, the importance of reliable carbon leakage instruments is increasing. At the same time, new international energy partnerships for the import of green energy sources as well as for significant CO2 reductions will become necessary on the road to climate neutrality. Finally, the convergence of CO2-pricing at EU and global level remains the key lever for successful climate action.
Simple answers fall short in the face of the complex transformation task
Much needs to be done - and the new BDI Climate Paths Study 2.0 illustrates just how much more is needed. The study confirms an amount of 860 billion euros as additional investment needed to reach the 2030 target in Germany alone.
Nevertheless, a successful energy and climate transformation offers a historic opportunity to renew our economies, infrastructures and industrial base - and therefore represents the basis for prosperity and social peace in the 21st century. Failing is not an option.
Go, Glasgow, go!