Climate Protection Pays Off

A new report has confounded the skeptics of Germany’s 2020 Climate Action Programme by demonstrating that low-carbon investments will provide an overwhelmingly positive boost to the economy, as well as protect the environment.

June, 2017

Germany’s 2020 Climate Action Programme will produce substantial economic gains. And no, that’s not a statement from the German government or the Green Party; it’s the conclusion drawn by a PricewaterhouseCoopers (PwC) report published last November. Skeptics of the program have often said that Germany’s 2007 commitment to reduce greenhouse gases by 40 per cent by 2020 compared with 1990 levels might leave the air better to breathe but would choke off economic growth.

Not so, says PwC’s cost-benefit analysis report, which forecasts that the program will add €30bn to German GDP by 2020 and create more than 400,000 jobs. At the time of publication, PwC partner and co-author Christian Liebaug said, “Our analysis shows clearly that the Climate Action Programme promises significant benefits not only in terms of environmental policy, but also for the economy as well.”

The report also indicates that spending money on slowing climate change will pay off economically as well as environmentally. It estimates that implementation of the program will require investments totaling €12bn, mainly from the private sector, but in the long term the savings from energy cost reductions will be more than double that sum.

According to PwC’s cost-benefit analysis, published last year, Germany’s climate protection policy will benefit the economy overwhelmingly.

© pixabay

Energy efficiency creates new markets

According to Robert Compton, manager for energy efficiency and smart cities at Germany Trade & Invest, measures to reduce Germany’s CO2 emissions can also benefit companies from abroad. “Environmental policy has created a market for energy-efficient solutions. Here international cleantech companies can find world-leading R&D ­partners and a thriving domestic market supported by progressive policy and a wide range of incentives. Once a foreign firm sets up a company here, it is on an equal legal footing with German companies,” says Compton.

Even when distributed across economic sectors, the benefits of implementing the program exceed the costs, found PwC. The industrial sector would have to invest to earn, but then the pay-offs are big, with estimated net savings of €74bn. This figure even included sectors where the direct costs were slightly higher than the gains, such as the energy sector.

Here PwC determined that energy providers as a group would come up about €10bn short, yet transfer payments, including network charges and cogeneration levies, could be used to offset this. The picture for the domestic sector was similar: households would have to find €56bn to comply, but would reap €82bn in savings and come out €26bn ahead.

Climate-friendly innovation thrives

The Climate Action Programme, which was drawn up by the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), contains 107 measures – including energy-saving building renovations, climate-friendly freight logistics, energy audits for industry, and wetlands conservation programs – all of which offer plenty of scope for climate-friendly innovation.

Compton points out that backing for improved, efficient products goes beyond what is available from BMUB. Among other sources of support are the initiatives of the economic and research ministries aimed at promoting firms producing energy-saving technologies.