Action and Trade

“The prerogative of interpreting the future now lies with the companies involved in climate protection”

…says Dirk Messner, who chairs the German Advisory Council on Global Change (WBGU) along with the climate scientist Hans Joachim Schellnhuber. Ralf Bindel interviewed Messner about the main institutional players for climate protection, as well as about migration and trade agreements.

Translated from the German by Katrin Haßberg, Tamara Reiser, Lisa Rülcker, Kai Schuhmacher, Isabel Schuseil, Jessica Stahl, Rosemarie Prinsloo and Vanessa Tacken.

Factory: The Paris Climate Agreement is more than likely going down in history, independently of the success of its implementation. International climate negotiations will continue in the next few years. Whom do you see as the leading players with respect to climate change and decarbonisation besides the climate negotiators?

Dirk Messner: I would say that, besides the states, which have to ensure regulatory policies that result in a gradual decarbonisation of our economics on a national and international level, there are five relevant players who make a large contribution to the entire movement towards a climate-friendly society. First of all, there are the companies. What are companies doing and to what extent are they proactively trying to reduce emissions? There are also clubs of companies within the economy that are very ambitious. In Germany, for example, there is the 2° initiative launched by the German economy. It includes companies that are willing to make larger contributions in order to reduce their emissions. Companies are very important and the economy is also important. The second relevant group of players is a subgroup of the economy, namely the financial companies and financial actors. A movement called ‘divestment’ has recently become internationally renowned. The idea behind it is that investors – regardless of whether they are small investors like you and me, or banks, or more recently the Allianz insurance group – divest themselves of assets and investments in companies that act in the fossil sector and divert these investments towards sustainable sectors like renewable energy. 

Is divestment really that powerful? Originally it was a demand by environmentalists, students and NGOs.

This process is very dynamic. The divestment movement seemed to be the charming idea of a handful of idealists at first, but now even large companies such as the Allianz are moving in this direction. The KfW banking group (a Reconstruction Credit Institute), the World Bank and large financial institutions – they make up the second relevant group of players. 

We are curious about the others.

The third big player is the cities. 60 to 65 percent of energy-related emissions originate from cities. It is therefore crucial how cities are continuing to develop – and there are cities that operate very ambitiously. The fourth group consists of non-governmental organizations that practise lobbying and public relations. And for me, the fifth player is science. As scientists, we also have an important function, because on the one hand we can analyse how the whole process is performing in general and whether the emission reductions that result from it are sufficient, and on the other hand we can provide advice on how to solve problems.

Is this also the sequence of the impact? Do companies come first and then divestment?

If I were to identify the entire impact contributed by the five participants, the companies and financial institutions would receive 50 percent. If they are moving in the same direction, this is of great significance. This is why I am mildly optimistic — over the last five years a lot happened in this domain. If we look at new investments in the energy segment worldwide, we had a distribution of these investments amounting to 80 percent in fossil and nuclear energy and 20 percent in clean energy in 2003-2004. By now, clean energy makes up 50 percent. For three years in a row, from 2012 through 2014, we have noted that new investments worldwide in the energy sector have led to more clean energy than those that were based on fossil and nuclear energy. The new investments have already reached the tipping point towards decarbonisation, which is an incredible change. The other stakeholders: cities, NGOs and science play an important roles, but the fact that companies are leading in this domain is excellent. After all, at the end of the day, this is where it will be decided whether a major part of the emissions reduction can be realised.

The companies are actually the ones generating and using energy. The business world decides on the type and amount of energy and resources put into products and services.

In fact, cities are often found on the demand side. In cities, we consume energy in the form of heating or cooling. Companies are more on the supply side, new mobility and energy systems are being developed with changes in infrastructure and facilities.

We can see that divestment is occurring. Progress globally has been slight as companies like Allianz only comprise a few percent globally, but things are moving in the right direction. The apparently weaker stakeholders, NGOs and science, are the only ones who pushed for change in the political domain in the past. Companies used to hold back or were even opposed to divestment, just like cities. Could that change in the future? Could stricter political frameworks for decarbonisation be demanded of government by these participants?

There are asssociations of companies, clubs and group who are demanding that politicians or climate negotiators implement ambitious goals like, for example, a global carbon tax. A step in this direction could mean a competitive disadvantage. Therefore, these companies are interested in making sure that all are treated equally. The companies that are ambitiously adjusting their business models for quick emission reductions are interested in achieving suitable regulations. For example, the World Bank Group brought together 1,000 large companies that prompted the community of nations and the climate summit to discuss a global carbon tax. The two-degree initiative of the German economy supports the German government and advises them to pursue ambitious, rather than weak, climate goals.

This means, the number of companies that are moving in the right direction is growing.

I am a bit surprised that you are actually rating the companies that high, seeing them as relevant actors to reach the two-degree or even 1.5-degree target. In the past, most companies have refused to allow inspection and set frameworks – just look at all major trade associations. Climate protection used to be rather something only a few could boast of. Those who have realized its importance and invest in efficiency measures certainly consider it as securing their future and competitiveness.

My observation is that perspectives have shifted in this regard. The energy sector is the most important area to focus on if one wants to talk about a decarbonized global economy, since 70 percent of emissions worldwide are caused by this sector. In many countries the situation is similar to ours: conventional fossil companies are under great pressure to adapt and we see worldwide that most of the new investments have been made in the renewable energy sector since 2012. It becomes apparent that the model for the future of the global energy system will be renewable and that fossil investments are on the retreat. A radical change has taken place. I would summarize it as following: the prerogative of interpreting the future now lies with the companies involved in climate protection. Those that are not on the right track yet, such as energy-intensive companies or German steel manufacturers, of course try to buy time from the government. However, there are very few entrepreneurs who dare to publicly say that climate protection is a process they want to block. At best you will find actors – I am not naive – who try to buy more time for the remodelling process by lobbying. Yet, there is a great deal of consensus on the need to move towards a climate-friendly economy. This development is present not only in Europe but also worldwide. 

Speaking of development: what is the situation in the countries where the current workbenches of the world are set, meaning in Asia? China and India are considered as emerging and/or developing countries with the nominally and potentially highest emissions due to their large population.

Viewed from the perspective of climate change policy, China and India are two different cases. It is quite true that a considerable part of industrial production takes place in China. There, emissions are not only nominally very high – after all, it has a population of 1.3 billion people – but the emissions per capita are also very high by now. A decade ago, they were still at 2.5 tons of CO2 per capita and year. In Germany, they were at approximately 10 tons at this time. China has now caught up with Europe. Here we are reducing slightly. We are now at 8 tons per capita and want to further reduce. China is now at 8 tons, meaning the emissions have increased significantly. In India, the emissions per capita are still at approximately 2 tons – far from our level, lower by a factor of 4.

Is China doing too little to slow the increase?

Regarding China, it should be said that a large part of the energy supply is based on fossils fuels, but it is also apparent that new investments are being made in the renewable energy sector. China considers itself the fastest economy that could bring those technologies to the market because China has remarkable exchange reserves to finance them. When I am in China, people tell me with an amused smile that China can achieve this change, whereas in Europe, due to debt problems, Germany would be the only country to have this capability. China regards itself as the innovator of decarbonisation. 

What about India?

Only three to four years ago, discussions in India suggested that climate change is a problem that was and still is created by industrialised countries and therefore, has to be solved by them. India did not consider it as its duty. The country will continue to depend on traditional concepts of growth, employment and the fight against poverty. Climate change issues still play a subordinate role. Nevertheless, the discourse has changed in the last three years. There are positive signals that the country is developing large renewable energy programmes. This is very reasonable because India has great potential in the wind as well as solar energy sectors, and it has already started using them. Another aspect is that India has not blocked the ambitious Paris Agreement, which also urges developing and emerging countries to do their duty. That was the point I had been worried about. Everything could definitely change faster, but at least China and India are moving in the right direction.

Is a kind of entrepreneurial awakening or a new consciousness for climate protection noticeable in China similar to that in Western countries?

If you look at industrialised nations, the discussion in the Chinese economy is similar to that in Germany. One group sees this as a new area of innovation, as a new wave with big eco-friendly investments in new infrastructures and business areas. Just like you hear it here, in energy efficiency companies, eco-businesses, or anywhere that deals with energy and resource efficiency. On the other hand, there are entrepreneurs working in traditional energy-intensive sectors. This includes the steel and cement industry as well as the automobile industry. Like here, they all try to buy time. However, there are three significant driving forces of climate orientation: The first is knowledge of the natural effects of climate change in China, such as diminishing water supplies, degrading soils and rising sea levels along the whole eastern coast. China’s vulnerability to climate change is a big issue. It is justifiable because the consequences will be more serious than, for example, in Europe. The second driving force is rather domestic. I guess we will see the fastest trend towards e-mobility in China since air pollution is incredibly high and the party is worried about its legitimation and power. People will no longer accept that their children cannot breathe freely. As a result, massive investments are being made in the expansion of new mobility infrastructures in the sector of electric mobility. The second driving force, therefore, is more health protection than climate protection, but the latter is also a force to be reckoned with.

And the third driving force comes from the strong foreign policy in China. I recently spoke with the deputy foreign minister. He said that China was a large country with great influence on the international stage and every global power needed a story to tell the world. Furthermore, he added that the American story was about democracy and freedom, and the Chinese story would be the combination of fighting against poverty and issues of resources and sustainability. He went on to say that China was still a developing country and it had few resources available and was vulnerable to environmental changes. He concluded that they were combining the fight against poverty with issues of resources, which was their soft power strategy. This depicts the current discussion in China.

According to the Coal Market Report by the International Energy Agency, a new coal-fired power plant went into operation every week in China in 2014, despite noticeable problems.

But every few days, an old power plant is shut down, as well. The power plants that are built today belong to the latest technical generation. I would prefer that they stopped building new ones. Nevertheless, the number of renewable energy sources has been increasing rapidly in China over the last four years. Coal is reduced accordingly because of this fast growth in renewable sources. The Chinese government had planned the expansion of energy mainly by coal combustion until 2030, but a significant part of energy development already comes from renewable sources. This is an important change that was introduced three years ago. Whether it happens fast enough to meet the two degree target remains to be seen. But China has planned to reach the peak of emissions from coal combustion by 2020 and reduce them afterwards. After 2030 all emissions should be reduced. Furthermore, China is setting up an emission trading system. Modernisation of the respective European system and a combination of both could give new impetus to the decarbonisation of the global economy and make a contribution to a level playing field in climate protection – which would help European companies as well.

What you describe is the package that China brought to the United Nations Framework Convention on Climate Change in Paris as voluntary undertaking, isn't it?

Exactly. I am quite sure China will reach it faster, but the government supports goals they know they can definitely manage. This is also an important change. I have been working intensively in China for ten years and I am a member of the China Council for International Cooperation on Environment and Development. This is a board of ten Chinese and ten international experts that advise the Chinese government on issues of environment and economy. Talking about the peak of emissions was taboo several years ago. Nowadays, the country is pushing towards this direction. Therefore, Germany's two most important competitors concerning efficiency technologies and energy infrastructure in the field of renewable energy are China and the USA, because these technologies are being pushed forward in the USA as well.

Next page the interview continues with topics including the responsibility to the impoverished countries, the sustainable planning of further urbanization, the connection between migration and climate change and the integration of climate protection into international trade agreements. These topics are also covered in Alessa Hartmann’s article in this magazine.

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