Tighter EU climate targets a challenge for German industry - DIHK

A tightening of the EU's 2030 climate target would come with far-reaching consequences for Germany's industry, the Association of German Chambers of Commerce and Industry (DIHK) has warned. The chambers said it remains to be seen whether a tightening "will bring more opportunities than risks," which would depend on "a multitude of factors." Tighter goals will not bring growth in Europe per se and any increased regulation for European companies will need to be accompanied by safeguards to avoid carbon leakage that distorts international competition, the industry lobby group said. It added that a more ambitious 2030 goal for greenhouse gas emission reduction would lead to "significant price hikes" in the European emissions trading system (ETS), the chambers warned. DIHK said that power prices could also rise if emissions-intensive power plants are not replaced quickly in the context of Germany's coal phase-out. This would hit energy-intensive industries particularly hard, said DIHK. In addition, sectors not covered by the ETS, such as heating and transport, would also be impacted if Germany's CO2 budget is reduced to reach tighter EU targets. "This would for example affect fuel emissions trading in Germany, which is scheduled to start in 2021," the DIHK said. The DIHK stressed that German companies are often leaders in environmentally-friendly technologies, which is why tighter environmental regulation could ultimately lead to higher demand for their products and services.

Renegotiating the European 2030 emissions reduction target has been high up on the agenda of Germany's current EU Council Presidency. Chancellor Angela Merkel has come out in favour of raising target to between 50 and 55 percent, leading to controversy within her government coalition. Germany's current 2030 climate target already aims to reduce greenhouse gases by about 57 percent, compared to 1990.