17.09.21 Investing in a climate-neutral future Author: Christian Buck • Credits: Getty Images/Ivan Bajic • Reading time: 3 min.

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Summary

The effects of climate change are becoming increasingly evident. The industrial nations in particular are faced with the major challenge of achieving the climate targets they have set themselves. Whether it is the move to renewable energies, the expansion of the grid and the infrastructure or the development of new (bridge) technologies, investments in a sustainable, climate-neutral future and the means of financing them are playing an increasingly important role.

At the same time, newly introduced regulations such as the EU Taxonomy are presenting companies with new obstacles to overcome. This makes it all the more important that we do not lose sight of our goal of achieving a climate-neutral future and maintaining German and European value chains. The Energy Report September 2021 reflects opinions on the sustainable transformation of the energy industry.

In the recent survey, at least 500 energy policymakers were asked between July 20 and August 9, 2021, about the current mood in the industry and about their views on the importance of bridge technologies and the political conditions.

The results of the survey have highlighted the following four central themes:

1. Energy policy decision-makers favor a market-oriented approach to the implementation of the 2045 climate targets.

Alongside investments in bridge technologies, the state has a number of other instruments at its disposal for supporting the energy industry with the process of decarbonization. A total of 72.2 percent of the energy decision-makers favor a market-oriented approach.

For the goal of climate neutrality by 2045, should the government rather focus on technology-open sector targets for industry or detailed regulations for different the sectors?


For example, only 11.1 percent of those who took part in the survey believe that the state should introduce detailed regulations for the various sectors. In comparison with other political instruments, accelerating approval processes was the most popular option with 46.7 percent approval.

In your opinion, should the government support energy companies on the path to climate neutrality more through direct subsidies or through tax breaks for CO2-free technologies?

2. The energy decision-makers are highly skeptical about the possibility of the energy industry becoming climate neutral by 2045.

The energy transition has made a major contribution to reducing greenhouse gas emissions. However, the energy decision-makers are not optimistic about the prospect of the energy industry achieving the goal of climate neutrality by 2045. Only 28.7 percent of respondents are of the opinion that the target can be met within this timeframe. This means that more than one in two of the decision-makers believe that the energy industry will not become climate neutral until after 2050.

Will the energy sector achieve climate neutrality by 2045?

3. Bridge technologies are seen in the energy industry as a decisive factor in achieving climate neutrality.

Bridge technologies can play a decisive role in the move toward climate neutrality. They are regarded as making an essential contribution to meeting climate targets by 77.2 percent of respondents. Almost half of the energy policy decision-makers see hydrogen as a key technology with the greatest potential for development. However, only around 19 percent of the respondents believe that electrification (for example, for transport or heating) or synthetic fuels have significant potential.

How important are technologies that bridge the gap to climate neutrality (i.e. "blue" H2) for the energy sector?

4. The state should finance the process of achieving climate targets by 2045 by regrouping existing investments.

In answer to the important question of how the state should finance the significant investment needed in a climate-neutral future, the respondents gave tax increases and new borrowing the lowest rating. However, regrouping existing investments had the highest level of approval at 38.7 percent. By contrast, measures such as tax increases for the general public or businesses, new borrowing, or removing the German debt brake received a more critical response. The second highest rating was given to financing instruments that were not described in any detail.

How should the government finance the necessary investments to achieve climate neutrality by 2045?

Conclusion

Implementing the climate targets of the European Union, the German government, and the Paris Climate Agreement is hugely important in order to reduce the impact of the climate crisis. Although Germany achieved its climate goals in 2020 as a result of the pandemic, the probable increase in greenhouse gas emissions by around 47 million metric tons of CO₂ compared with the previous year demonstrates the enormous extent of the challenges facing all sectors of the economy.

The survey outlines possible ways of moving toward a climate-neutral energy industry. On the one hand, the energy policy decision-makers are convinced that bridge technologies and a market-oriented approach continue to play a key role in achieving the climate targets. On the other hand, the survey also indicates that the decision-makers are highly skeptical about whether the targets can be met. This makes it all the more important for us to establish the necessary conditions for the energy industry and for all other economic sectors in the upcoming legislative period so that we can not only maintain but also increase the international competitiveness of both Germany and Europe as a whole.

→ The Energy Report September 2021 is available for download here.


Debate.Energy is a magazine that celebrates opinions and loves facts. Since April 2020, our editorial team has been providing a platform where scientists, experts, businesspeople, politicians, and observers can give their views on one of the most important subjects of our time: the future of energy.

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