30.11.22 “We need a much better legal framework” Interview with Alexander Stork, Deputy Head of Economics at the German Association for Small and Medium-Sized Businesses (BVMW) • Reading time: 5 min.

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Summary

Small and medium-sized enterprises (SMEs) are currently under significant pressure as a result of the energy crisis, inflation, and supply chain disruption. Alexander Stork, Deputy Head of Economics at the German Association for Small and Medium-Sized Businesses (BVMW), explains how they are still managing to work toward the green transformation, despite the current situation. 

The EU Commission aims to make Europe the first climate-neutral continent. Do your members share this enthusiasm for climate action? 

Yes, they definitely support the move toward climate neutrality. And they are grateful for the predictability that enables them to plan with certainty. This is why the European targets are so important for SMEs; they form the framework for the measures that are adopted at a national level. If we take emissions trading as an example, we need a European solution to ensure that the conditions are the same for all companies. 

Do SMEs have the predictability that they need? 

Until now, the EU has mainly set strategic targets without including a lot of detail. The first definite measure is the phase-out of combustion engines running on fossil fuels in 2035. Other measures are still under discussion. However, definitive regulations play a decisive role for small and medium-sized enterprises and these are still lacking in many areas. In addition, many of our members are more concerned at the moment with the question of how they will get through the current difficult situation. 

In the light of all the many crises, do your member companies have the resources to focus on sustainability and climate action? 

Of course it is difficult, because the current situation is genuinely extreme. A survey of 850 member companies carried out in August showed that 73 percent of them see energy prices as a major challenge, while 42 percent said that the situation puts their survival at risk. In another survey held in September, this figure had risen to almost 52 percent. Naturally this makes it extremely challenging to introduce measures to increase sustainability and protect the climate. On the other hand, we are aware that investment in renewable energies and storage facilities is part of the solution to the current energy crisis. It is important to provide aid and to safeguard the funding for investment in climate action measures. 

In your view, which instruments are particularly well suited to driving the green transformation? 

CO2 trading on a European level is a very useful instrument and it was particularly important to include the building and transport sectors in the system. I also believe that investment in increased energy efficiency is valuable, but many companies are finding it difficult to finance measures of this kind because of liquidity problems. In addition, businesses should be focusing increasingly on self-supply, for example photovoltaic systems combined with storage facilities. This would enable them to have a local, sustainable, and secure supply of energy. 

How should these measures be funded? 

The most important factor at the moment is ensuring the survival of SMEs. It would be helpful to have an emergency fund, for example, for companies that have fallen through the net when it comes to the current brake on prices. Measures of this kind could help in the short term. Subsidies would be helpful in the longer term, but they are not the only means of enabling the green transformation to take place. A more important consideration is the need for a much better legal framework, for example when it comes to tax on the consumption of self-generated electricity. Although many SMEs currently have systems installed, they cannot connect to the grid. They see the reason for this as different interpretations of the technical conditions on the part of the project developers and the grid operators, the requirement for additional documentation, and the failure to make use of exemptions, such as temporary operating permits. In addition, feed-in approvals and meter applications often take a long time to process and components such as meters and remote control systems are in short supply. In this case, it would be possible to take measures relatively quickly to exploit this unused potential. 

Are the political decision-makers in Berlin and Brussels listening to what you have to say? 

Yes, they are listening. However, the views of the large companies are often given more weight. For example, there was a representative of the Federation of German Industries (BDI) on the Expert Commission on Gas and Heat, but no one representing SMEs was involved. This is obviously reflected in the results down the line. But ultimately I believe that the politicians see SMEs as important players. 

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