new energy: At their recent summit at Schloss Elmau, the G7 countries pledged to completely decarbonise the world economy. Is this the breakthrough climate protection has been waiting for?
Oliver Geden: No. For now, it changes nothing. The G7 countries made a similar resolution in 2009. All that’s new is the word “decarbonisation”. This is an indication of a broader ambition in Paris: decarbonisation is likely to join the two-degree target as a central goal, although I don’t expect a concrete timeframe to be announced. The concept has been hailed by NGOs, as in contrast to the two-degree target it makes it easier to denounce political contradictions, for instance if states start building new fossil infrastructure.
Christoph Bals: The most important thing about the pledge is that the G7 leaders have turned the two-degree limit into an investment signal. For the global economy, this means phasing out coal, oil and gas by the end of the century. However, a G7 summit cannot be expected to result in a climate policy breakthrough; what it can do is marshal political will. And this declaration of intent, formulated in this way for the first time, is extremely important.
ne: Shortly after Elmau, German economy minister Sigmar Gabriel’s plans for a coal tax fell through, while Germanwatch has shown that the national climate targets of the G7 nations and the EU are incompatible with those announced at the summit. Do these summit resolutions carry any weight at all?
Bals: The coal tax would have provided a cost-effective way of getting the coal phase-out off the ground. Even so, a number of older coal-fired plants have now been successfully shut down. Even more importantly, it has become clear to all parties involved that action must be taken in the coming months to plan the coal phase-out over the next two decades. The G7 nations have put this issue firmly on the global agenda, and generated a certain amount of pressure. However, we will only be able to judge the effectiveness of the summit resolution a few years from now. As far as the climate targets of individual countries are concerned: the Paris agreement is likely to include a provision requiring commitments to be upwardly revised every five years. Many countries will probably be amenable to higher targets as early as 2020, as the cost of renewables and storage technology continue to fall. The two-degree limit is the benchmark for this process.
Geden: Not to put too fine a point on it, the summit resolution carries no weight at all! There are a number of contradictions between the G7 resolution and what nations are actually doing day to day. If you wanted to be cynical, you could say that the G7 resolution doesn’t even rule out the construction of new coal-fired power plants, as they would no longer be in operation by the end of the century anyway.
Bals: It’s a good thing that you describe this statement as cynical yourself. Whoever you talk to – politicians all over the world, German trade unions or the German energy sector – it’s quite clear that climate policy has been given a boost by the G7 resolution. It is equally clear that this boost is no substitute for the tough political decisions that need to be taken. But it does make them easier
ne: Do you believe that the goal of keeping global warming within the two-degree limit is feasible?
Geden: It is absolutely clear that what individual countries are currently offering is nowhere near enough. This is why an informal agreement to stick to the two-degree target has arisen. There are hopes for higher pledges in the reviews to follow Paris, as Mr Bals mentions.
Bals: Given the proliferation of renewables and the resulting lowering of costs, I believe there is a real chance that the targets can be replaced with significantly more ambitious ones in the near future. But even if at some point that opportunity were lost, it would be important to stick to the two-degree limit: it has a solid scientific grounding, and the international community has agreed to be measured against it. Even as a record of failure, the limit is of huge political and legal importance.
ne: What would it take for you to consider Paris a success, and what still has to happen to make that possible?
Bals: Success in Paris, even in the form of a binding treaty, is not going to fall out of the sky, but depends on worldwide implementation of the resolutions, and ultimately a trend reversal in emissions. On one hand, it is about getting leading players such as the G20 nations, the Munich Security Conference and the World Economic Forum in Davos, i.e. the financial system, to commit to serious steps towards decarbonisation in the year following Paris. On the other, it is about an economic shift towards divestment, and paradigm changes such as approaches based on Economy for the Common Good, energy cooperatives, carsharing and so forth.
Geden: The 2011 conference in Durban agreed that a binding, comprehensive global climate deal compatible with the two-degree limit had to be reached by 2015 at the latest. If that does not happen, you could say that Paris has failed. The way I see it, overcoming the distinction between industrialised, emerging and developing economies would be a form of success. So far, international climate protection efforts have been restricted to the old industrialised nations.
ne: 2014 was the first year in which carbon emissions in the global energy industry rose by only a very small margin, even in the absence of an economic crisis. Does this mark the onset of a decoupling of economic growth from fossil energy sources?
Geden: No. For one thing, the figures need to be taken with a pinch of salt, as China’s figures invariably end up being revised upwards. But even if the figures are accurate, a single year does not constitute a trend reversal. We need to wait and see. And while it is true that China is sending positive signals, other emerging economies such as India and Indonesia continue to rely heavily on coal.
Bals: I agree that what we are seeing is not so much a trend as the first serious signs that decoupling is possible. Turning these signs into a trend is a task for Paris.
ne: Renewables are getting both cheaper and more profitable, while new coalfied power plants are becoming economically unviable. Do we even need politics any more – or will the market take care of the energy transition? If so, how would this affect the task of the legislator given that there has never been a free market for energy?
Bals: It is an illusion that the energy transition can succeed without politics. However, politics alone is not enough either. The transition needs the support of market dynamics. There is also a third key factor: everyone is going to have to make some lifestyle changes. Only if these three conditions are met can the transition succeed. As far as the role of legislation is concerned: investment does not just depend on whether something is profitable, but also on the degree of risk involved. Accordingly, we need a strategy which specifically addresses the various risks inherent to the renewables sector. What is more, in many places renewables are unable to compete because of massive subsidisation of fossil fuels. Here too, political intervention is needed.
Geden: Perhaps the market will take care of the electricity transition, at least in most countries. But this would only solve one third of the problem. There is as yet no sign of such a transition in the transport sector, and for heating it is still in its early stages. We need climate diplomacy. The question is sim ply whether the best way to make progress is to apply sanctions, or whether sometimes it is enough for governments to take it on trust that efforts are also being made elsewhere, rather than hide behind the excuse of other countries’ failure to act. Without the bilateral agreement between the US and China it would have been much harder for Obama to push through his ambitious climate policies. Climate diplomacy doesn’t have to take place at UN level.
Bals: It doesn’t have to take place only at UN level. That is where minimum targets are agreed on. Real momentum is generated bilaterally and by pioneer groups.
ne: Are Germany and the EU still pioneers in the field of renewables and the energy transition? If not, which countries or organisations are now leading the charge?
Geden: In the EU, the share of renewables in energy consumption is 16 percent, which is not especially impressive. However, developments in the EU have given others the opportunity to get on board. Meanwhile, a lot more is going on in other parts of the world, including the US. China is now way ahead.
Bals: Yes, the EU as a whole has lost ist status as a pioneer. Right now, climate protection is enjoying greater momentum in China and the US. Germany continues to set an important example with its energy transition. If a major industrialised nation like Germany can pull off a phase-out of nuclear and coal in such a way as to make it an attractive prospect, this will have enormous repercussions worldwide. The same applies if it fails.
ne: In the future, the biggest emitters of carbon dioxide are likely to be countries which are currently developing or emerging economies. What does this mean for international climate protection policy?
Geden: The share of emissions caused by the G7 and OECD countries as a whole will fall. Emissions in the EU and the US peaked long ago. The real issue is how things will develop in emerging economies. But we can hardly say to them “don’t do what we did”. It is crucial that emissions in countries such as China and India peak in the next 15 years. China is open to such a debate – India is not, and could well become the next “bad guy” of international climate politics. In order for the energy transition to make progress in emerging economies, technological cooperation and transfer of know-how are more important than agreements. And there is indeed a global propagation of technologies to be seen. Maybe we’ll see a repeat of what happened with PV elsewhere.
Bals: In concrete terms, Germany should reach a bilateral agreement with India to regulate how widespread expansion of renewables, energy efficiency, smart grids and storage technology can be set in motion in India, by means of both legislation at national level, and bilateral or multilateral sharing of risks. This would also give India more room for manoeuvre in international climate negotiations.
ne: New figures are joining the public climate debate: the Pope recently issued an environmental encyclical, and a court ordered the Dutch state to do more to protect the environment. What trends does all this point to? Might climate protection be elevated to a new social or even moral value?
Bals: The encyclical is a remarkable text. In it, the world’s largest church is advocating a paradigm shift in which man kind’s dominion over the natural world is radically called into question. The Pope is trying to prompt a dialogue at a global scale about what it means to go from an understanding of Nature as the environment in which we live to an understanding of the economy. He questions private ownership of collective goods such as water or the climate. No one should expect this new approach to have any political consequences in the short term. However, in the medium term it could become just as relevant as the alliance between Pope John Paul II and Ronald Reagan against Eastern Europe decades ago – albeit in an entirely different way. The ruling in the Netherlands highlights the importance of the two-degree limit. It lays the foundations for enforcing more decisive action on the part of the government, and marks the beginning of a process which could make compensation claims for climate damage a real possibility ten years from now or even sooner.
Geden: I see the encyclical as nothing more than hype, which will dissipate as quickly as it appeared. I seriously doubt that it will persuade even a country as devoutly Catholic as Poland to change its energy policy. The intervention of the legal system in climate protection issues is an interesting development, although the ruling in the Netherlands may well be challenged by the government – or simply not implemented by 2020. In general, we are seeing a host of climate policy initiatives the potential effects of which are practically impossible to predict, like the Divestment movement.
ne: Which players and issues will set the tone of the debate in the coming decades?
Geden: The importance of sectors other than electricity production will grow. The transport system is the most problematic as far as emissions are concerned. The emissions caused by air travel are increasing, while goods and passenger transport is on the rise worldwide. The issue of climate adaptation will also continue to gain prominence, as mitigation efforts have already come far too late. In addition, interest in geoengineering is growing rapidly among researchers. How can we remove carbon dioxide from the atmosphere or alter the Earth’s radiation budget? The IPPC is already making allowances for “negative emissions”. Introducing additional sulphur particles into the stratosphere might be an unbeatable strategy in terms of cost, but it is also a huge gamble. Even so, faced with more and more extreme effects of cli mate change, there could well be countries which resort to such measures in a bid to get things back under control. Politically, this is not being discussed yet, due in part to the fear that it would reduce willingness to cut carbon emissions. But ten years from now geoengineering will be at the top of the agenda. Ultimately we will be faced with the choice of either giving up on the two-degree target, or resorting to geoengineering to achieve it.
Bals: The importance of climate on the agenda will grow in surges. Heating and private transport are also likely to become electrified, so here too renewables, storage technology and smart grid solutions will play a central role. Meanwhile, almost all relevant business models are changing due to the influence of information technology. In particular the combination of digitalisation and PV could become a mega-trend. If climate change continues unchecked, major tipping points will probably be reached before 2050, with drastic effects on life as we know it: changing monsoon patterns in India, the collapse of the Amazon rainforest, or an unavoidable sea level rise of several metres. This would radically alter the climate debate, with some nations fighting for survival while others turn to megalomaniacal geoengineering projects – a remedy which could turn out to be worse than the disease itself.