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2022-01-03 publication

A Permanent Shift

In the effort to secure a world worth living in for future generations, German industry is facing the greatest transformation of its post-war history. Ursula von der Leyen, President of the European Commission, believes that nothing less than the survival of humanity at stake. The formerly feel-good topic of sustainability has thus become a disruptive factor with the power to make or break companies and governments.

By Ulrich Tückmantel

Kontakt

Editor-in-Chief VDE dialog

Never before has a German government coalition been under such pressure before even taking office. Ahead of the Climate Change Conference at the end of October, the United Nations demanded a seven-fold increase in climate protection efforts in order to achieve the 1.5-degree target its members have set. European Commission President Ursula von der Leyen took the occasion to make a dramatic appeal to the world community: “It’s a question of survival of mankind on this planet.” However, it was around the same time that Berlin got a rude awakening from Brussels. For the first time (and as the only major EU member), Germany is being forced to pay climate compensation for failing to save 22 million emission units in 2020. Raising the stakes a bit further, the Federation of German Industries (BDI) has hardly minced its words in the recent study “Climate Paths 2.0”, stating that “Germany must undertake the greatest transformation in its post-war history.”

None of this is hyperbole. As the BDI sees it, the climate crisis is offering politicians and business leaders the chance to work together to transform Germany into a more sustainable country. Indeed, achieving greenhouse gas neutrality by 2045 as enshrined in law “requires a fundamental restructuring of our energy system, international energy supply, building and vehicle stock, infrastructure, and large parts of industry,” as the BDI study states. Over 150 experts from 80 companies and industry associations contributed to the report, and they believe these efforts would involve some huge figures (see box on page 15).

However, soaring gas prices and heating costs, massive supply chain issues, raw material shortages, rising rents and noticeable inflation are fueling resistance to further tax burdens and prohibitions among a population exhausted by the coronavirus and divided by the fourth wave of the pandemic. The pressure to postpone, against all reason, Germany’s shift to a social-ecological market economy as negotiated by the SPD, the Greens and the FDP during their coalition talks could rise considerably this winter. And that wouldn’t take much: the weather just needs to get a bit colder, with a bit less sun and wind – about the same as it was in 2017 on January 16–25.

Dark periods and frost spells underscore urgency

Graphic representation of sustainability skyline
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For those ten days at around 7 p.m., renewable energy sources across Germany fed a maximum of 7.9 to 13.7 gigawatts of electricity into the grid – while industry, commerce and households simultaneously consumed between 72.8 and 76 gigawatts of power. Society did not break down in 2017 during this dark cold snap simply because there was enough electricity available from nuclear and coal-fired power plants. In 2018, the weather struck again. Instead of a dark few days in January, it opted for a surprising frost spell with temperatures as low as -20 degrees Celsius between mid-February and early March. On February 17–23 in the critical period from 5 p.m. to 7 p.m., renewable energy sources provided only 11 percent of the required power, forcing the grid to fall back on coal-fired and nuclear power plants once more. Meanwhile, most of these plants are no longer generating electricity, as Germany is the only industrialized country leaving both nuclear power and coal behind at the same time. The first coal-fired power plants were shut down in 2020, and those still in operation at the end of this year will only be producing 30 of the previous 40 gigawatts of coal-fired power. On December 31, 2022, the plug will then be pulled in Bavaria at Isar 2, the last and most powerful German nuclear plant (1,485 MW).

All this means that the plan crafted by the SPD, the Greens and the FDP in their talks to form a coalition government comes not a moment too soon: “We are making it our joint mission to drastically accelerate the expansion of renewable energies and remove all obstacles and barriers to this process. To this end, we will significantly speed up planning and approval procedures.” The Greens in particular should be prepared for conflicts with organizations they typically consider allies. As it turns out, nature and climate protection do not always go hand in hand. In November in Düsseldorf, for example, the chairman of the NRW State Association for Renewable Energies (LEE) and former Green Party state parliament member Reiner Priggen organized an LEE demonstration against the Nature and Biodiversity Conservation Union (NABU). “In recent years, its association in North Rhine-Westphalia in particular has made the construction of wind farms more difficult with numerous legal challenges and interventions with the regulatory authorities,” Priggen said. He also accused NABU of hindering the energy transition through “early-stage objections that cause years of delays.” In North Rhine-Westphalia (NRW) alone, NABU has allegedly blocked more than 100 wind turbines with a capacity of over 500 megawatts in recent years, preventing the reduction of several thousand tons of CO2.

Solar power enjoying greater acceptance than wind turbines and the transition away from coal

The share of renewable energies in the German power sector, at 251 billion kilowatt-hours, exceeded the power generation from fossil fuels (excluding nuclear power) for the first time in 2020, but it still accounted for only 45.4 percent of gross electricity consumption. That said, this does represent an increase of four percent over the previous year. According to the German Environment Agency, this development was mainly driven by the expansion of photovoltaic systems. Within the last five years, the total installed photovoltaic capacity in the country rose by 37 percent from 39,224 megawatts (2015) to 53,848 megawatts (2020). While political disputes rage mainly over coal mining and wind turbines, photovoltaic systems are finding the highest acceptance among the general population. According to a survey cited by the Fraunhofer Institute for Solar Energy Systems ISE, solar panels are among the most popular energy producers in Germany. What’s more, “popularity increases when such power plants in their own neighborhood are practically experienced.”

Manfred Trimpop can attest to all of this. A trained electrician who’s been a VDE member for 40 years, he advocates for photovoltaics in the small town of Schalcksmühle in the Sauerland region – and he’s anything but a typical climate change activist. Having installed storage heaters in his younger years, Trimpop was always a proponent of nuclear energy. “I think we were wrong to pull out of that technology,” he says. It has already been some years since he bought himself a 5,000-liter rainwater tank, tested solar cells for heating water and installed a rocket mass heater. He gets the wood for the heater from his own renewable forest: two hectares of sustainability he was able to buy from a community of heirs. Since March, Trimpop has also been generating his own electricity with a photovoltaic system on his roof. What convinced him? “It’s affordable now and it works,” Trimpop says.

Sustainability pioneers also boosting local trades

Graphic representation of sustainability / pole as collage with blue arrows
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These are arguments that count more than political appeals in the small town of Schalcksmühle. For generations, most of the jobs in this 10,000-resident community in the Märkischer Kreis district of NRW have been provided by family businesses in the electrical and metal industry. Some 80 clubs and associations ensure a vibrant community life. The mayor and the majority of the municipal council are independents rather than members of the major political parties. As chairman of the Waldesruh-Stallhaus community association, Manfred Trimpop is trying his best to set an example and convince his neighbors to make the investment in installing photovoltaic systems on the roofs of their charming homes. “Using and storing your own electricity autonomously is the most important step,” the 69-year-old says, “and it pays off.” The local newspaper has also reported on his advocacy, which, incidentally, creates work for local craftspeople.


Hydrogen economy key to the energy transition’s second phase

The political focus on the higher electricity consumption forecast of between 645 and 665 terawatt-hours for 2030 (the German Renewable Energy Federation even assumes 740 terawatt-hours) must not obscure the fact that a successful energy transition cannot be achieved with electricity alone. VDE President Prof. Armin Schnettler agrees: “Without a strong hydrogen economy, the second stage of the energy transition – decarbonization – won’t get off the ground! Not least because around 50 percent of global energy consumption is either difficult or impossible to electrify,” he warns (see interview on page 16).

Decarbonization is also just one of the four “disruptions” that the German Economic Institute (IW) has identified as the greatest structural challenges at the moment, along with digitalization, demography and deglobalization. Upon closer evaluation, all four of these are sustainability risks that stem from ongoing short-sightedness. In an opinion piece for Süddeutsche Zeitung, IW director Michael Hüther recently stated the following: “Due to the failings of recent years, we now have to simultaneously accomplish what was already testing the limits of political discourse, parliamentary control and social acceptance. The issue is therefore much more than passing numerous new laws; it is about the effectiveness of state action.”


Companies working to take environmental and social impacts into account

Representation of sustainability a streetcar with blue arrows
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Sustainability has long since evolved from a subject of feel-good stories for communications departments to a core concern of many companies and corporate groups. Take Franz Haniel & Cie., for example, a family-owned investment giant in Duisburg that has been in business for 265 years. Axel Berger, whose official title at the company is “Digital & Sustainability Lead”, recently explained in an online panel hosted by the United Nations Association of Germany that his work involves helping investment companies achieve operational progress in sustainability and digitalization. At Haniel, they call this “making investments enkelfähig” (a German word that refers to the world one’s grandchildren will live in).

Robert Bosch GmbH offers one success story in this regard. Bosch and its more than 400 locations worldwide have been climate-neutral since 2020. After having this independently verified, the company has now set its sights on systematically reducing its upstream and downstream emissions (Scope 3) by 15 percent by 2030. “At Bosch, however, sustainability is about more than climate neutrality and the reduction of Scope 3 emissions. We’re also setting ambitious goals in other areas, including careful water management and a strategy for the circular economy that takes environmental and social impacts along the entire value chain into account,” says Filiz Albrecht, who joined Bosch in 2017 and has been responsible for environmental protection and sustainability since January 2021 as a member of the Board of Management and Director of Industrial Relations at Robert Bosch GmbH.

Bosch is committed to the 17 Sustainable Development Goals (SDGs) of the United Nations. The company has identified 11 of them as particularly relevant for its strategy and entered them into a “materiality matrix”, which was last updated in 2019. This involved asking over 1,000 international stakeholders – from business partners to NGO representatives to potential job candidates – to assess the relevance of sustainability issues for Bosch. In terms of public perception, this has definitely paid off for the company. Environmental and development organizations such as Germanwatch and Foundation 2° are now singing its praises – a clear sign that Bosch has succeeded in transforming its image, as well.

ULRICH TÜCKMANTEL

is a journalist who currently works as a press spokesman. He was editor-in-chief of Westdeutsche Zeitung until 2019.

Investment required

The BDI study “Climate Paths 2.0” estimates that implementing Germany’s climate protection measures by 2030 will require investments of around €860 billion. This comes to around €100 billion per year – almost 2.5 percent of Germany’s annual gross domestic product. The climate targets for 2030 entail almost halving emissions compared to 2019. The study comes to a clear conclusion: “With current policies Germany will fail to reach the climate targets in any sector.” Without any changes, Germany would save around 184 million tons of CO2 annually by 2030, which is only half as much as necessary. According to the BDI, the necessary state support for the transformation and the compensation for the resulting burden on households and companies will amount to €47–50 billion in 2030. Between 2021 and 2030, the total will amount to €230–280 billion. These investments would have to be financed with cuts in the federal budget, levies, taxes or debt.

 

More information on the study can be found here:

https://english.bdi.eu/#/article/news/climate-paths-2-0-study-recommendations-for-action/

Mehr Informationen zur Studie