National and InternationalClimate Protection Policyfrom an Economic PolicyPerspective

Lecture by Counselor

Werner Ressing

Translation by Burghard Schmanck

Climate protection is right andimportant, but: toacknowledge factsand react rational onclimate change

Initial

Climate protection since 20 years on the political agenda

since the federal government operates active climate policy, i. e. today we don‘t start at

"zero"

Energy productivity since 1990 by around 22% increased

CO2 by 16%, all Greenhouse gases by 20,4% have fallen

Greatest Reduktion in the industrial sector by ca. 130 Mio. t

Many industries are approaching the physical limits

It is undisputed: Global problems require global solutions

Desire and reality of the emissions development

Concern about "blinkered thinking„

In the population is the impression:

"We can solve the problem alone.„

Necessary: look at the global development

8,1

3,8

5,46,1

0

1

2

3

4

5

6

7

8

9

1971 1990 2002 2030

Mrd

.M

en

sch

en

Development of the World's Population

According to the medium forecastof UN

Increase of the Consumption of Energy

Source: IEA

0,36 0,34 0,29

17,1

11,48,7

0

5

10

15

20

1990 2005 2030

Mrd

.t

Energieverbrauch Mrd. t RÖE Deutschland Energieverbrauch Mrd. t RÖE Welt

CO2-Emissions of China and India to 2030

3,3

0,61,1

1,8

11,4

8,6

5,1

2,2

0

2

4

6

8

10

12

1990 2005 2015 2030Jahr

Mrd

.t.

Indien

China

Source: IEA World Energy Outlook 2007 (Referenzszenario) and own calculations

14,1

21,0

27,1

31,9

34,0

36,6

41,9

1 1,00 0,9 0,8 0,8 0,8 0,7

0

5

10

15

20

25

30

35

40

45

1971 1990 2005 2012 2015 2020 2030

Jahr

Mrd

.t.

Globale CO2-Emissionen und Prognose

CO2-Emissionen Deutschland und Prognose

Global Increase of CO2-Emissions to 2030

Source: IEA World Energy Outlook 2007 (Referenzszenario) and own calculations

CO2-Emissions by groups of countries – in future:developing countries > industrialized countries

1,1 1,8 3,35,1

8,6

11,46,1

8,0

10,414,3

15,7

16,7

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

2005 2015 2030Jahr

Mrd

.t.

Industrieländer

Entwicklungsländer

China

Indien

Source: IEA World Energy Outlook 2007 (Referenzszenario) and own calculations

Increase of C02-Emissions 1990-2012 – Reduction AchievementsGermany and EU

10900

-254

-446

0

-2000

0

2000

4000

6000

8000

10000

12000

1990 2012

Jahr

Mio

.t

D

EU 27

Global

D

EU 27

Global

EU-Reduktion to 2012 is in 12months offset by global growth

27,1

21,0

31,934,0

36,641,9

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Jahr

Mrd

.t.

Ko

hle

nd

iox

idThe Kyoto-Protocol - even if fully implemented - would not have a noticeable effect

on the global greenhouse gas emissions' growth

Source: IEA World Energy Outlook 2007 (Referenzszenario) and own calculations

The reality

CO2 is NOT a harmful gas (it is needed by any plant)

therefore it is not justified to call it atmospheric pollution or

contamination

Global emissions are increasing by some 400 million tons per year,

or more than 1 million tons per day

It is clear that as long as the "global chimney“ open upwards, there

will be no absolute reduction in greenhouse gases enter

Even a successful implementation of the Kyoto Protocol will not

even leave a dent

Any CO2 reduction by Germany or the EU is quickly compensated

within few weeks or months

A "pilot role" does not seem to have a political impact on other

countries

Conclusion here: With a "door"we can‘t stop a Tsunami

Targets of the EU-Climat Policy to 2020

Reduction-target GHG-20 % (-1.118 Mio. t.) based on 1990

-14 % (-733 Mio. t.) relative to 2005

EU-ETS-21 % (-464 Mio. t.)

relativeto 2005

Non-ETS-10% (-269 Mio. t.) relative

to 2005

27 Member States from -20% to +20%

Change of CO2

equivalents1990 to 2008/12EU-burden sharing

45

25

19

7

3

0

0

-4

-10

-10

-13

-15

-35

-99

-254

-341

-400 -350 -300 -250 -200 -150 -100 -50 0 50 100

Spanien

Griechenland

Portugal

Irland

Schweden

Finnland

Frankreich

Luxemburg

Österreich

Belgien

Niederlande

Dänemark

Italien

Großbritannien

Deutschland

EU insgesamt

Senkung der CO2-ÄquivalenteErhöhung derCO2-Äquivalente

Germany contributes thelion's share of 75% with254 million tonnes

Remeinder: In the EU-Climate-Bundle 2008-2012 Germany bearsthe main brunt

Deutschland; -174

Vereinigtes Königreich; -119

Italien; -93

Frankreich; -86

Spanien; -64

Niederlande; -38

Belgien; -25

Griechenland; -18

Polen; -17

Österreich; -17

Irland; -14

Dänemark; -13

Finnland; -13

Schweden; -12

Tschechische Republik; -12

Portugal; -7

Slowakei; -3

Luxemburg; -3

Bulgarien; -3

Estland; -2

Slowenien; -1

Zypern; -1

Ungarn; 0

Malta; 0

Lettland; 1

Rumänien; 1

Litauen; 1

-200 -180 -160 -140 -120 -100 -80 -60 -40 -20 0 20

Reduktion THG 2005-2020 according the EU-Climate-Bundle(ETS und Non-ETS) Here, too, Germany has thelargest share; I remember the nuclear exit

35,5

27,1

21,0

31,934,0

36,6

41,9

30,2

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Jahr

Mrd

.t.

Ko

hle

nd

ioxid

CO2-Emissionen und Prognose nach IEA

Reduktion EU 27 um 20% von 2012 bis 2020

Weltweite Reduktion um 20 % von 2012 bis 2020

Carbon Dioxide-Emission and global Impact of a reduction of20% in Europe and worldwide

Source: IEA World Energy Outlook 2007 (Referenzszenario) and own calculations

Problems of the EU-Climate-Bundle – specially the ETS

-21% reduction relative to 2005 for almost all sectors in Germany becauseof the current inputs without growth- and job-losses not affordable

Reversal of the EU-sharing (10% ETS and 21% Non-ETS makes sense)

Auction of certificates in the maufactoring industry ecologically andeconomically counter-productive (location- and job-relocation)

By „cap and trade“ ecological target „automatically“ reached

Auction leads to competitive disadvantages and even directly to the end ofsome economic sectors, such as glass, paper, lime

Economic burden for auction across all sectors at 50 €/t higher as total Eco-tax revenue (18,7 Mrd. €)

Job losses after reports not yet completed ca. 250.000 for Germany

Direct employment effect (ET-Sektors) to 2020

Altogether about 100,000 directand 150,000 further jobs will belost by a full auctioning

Source: EEFA

Economic burden of the glass industry

230 Mio. EuroProfit (estimated)

-85 Mio. EuroResult

-315 Mio. EuroTotal burden

-104 Mio. EuroCosts by electricity consumption

-211 Mio. EuroCertificates cost at 45 euro / t

Source: BV Glas

Economic burden of the paper industry

75 Mio. EuroProfit (2007)

-329 Mio. EuroResult

-404 Mio. EuroTotal burden

-120 Mio. EuroCosts by electricity consumption (+15%)

-284 Mio. EuroCertificates cost at 45 Euro /t

Source: vdp and own calculations

EU-Climate-Bundle

The federal government has recognized the problemand wants to protect the competitiveness of oureconomy

Carbon-intensive industries fully exempt from the auctioning

(simultaneous decision to climate-bundle)

Indirect effects to the electricity price by auctioning compensate

No redistribution of certificates („poor, rich“)

A CDM/JI-Rate amounting to 50% the Reduction commitment

The compliance of the Kyoto-targets require as a minimum by all

member states

Seizing Opportunities: Global Strategy for the Future design rationally

Because it is unrealistic to expect that the "global chimney" will be closedsoon:

Squeeze the "full" lemons and not the "empty", i.e. reduce where it is mostcost-effective and economical; in other words:To reach the ecological necessary in a economical efficient manner!

Therefore: Establishment of a global climate fund, starting with forexample 1$/tCO2 i. e. with dynamic volumes (currently 28 Mrd $/a) for theglobal most efficient projects (top-runnes)

Establishment of a "Climate Change Adaptation Fund" “ (CCAF) toimplement adaptions

Special energy program in the "sunbelt of the earth" CO2-free nuclear energy use unreservedly All technological options unconditionally and accelerated further develop

Thank you for yourattention!