German Climate Goals Need ‘Massive’ Cut in Industry CO2 by 2030

(Bloomberg) -- German industry will need to swiftly implement a “massive” reduction in greenhouse-gas emissions to conform with targets in the ruling coalition’s new climate protection law.

According to a draft seen by Bloomberg, industry will need to cut annual CO2 emissions to 118 million tons by 2030, from 186 million tons last year, as Germany seeks to achieve carbon neutrality by 2045. The energy sector’s target is even more ambitious, with a requirement to slash emissions to 108 million tons from 280 million tons.

“In the industrial sector, the indicated reductions can only be achieved with massive decarbonization of industrial plants and processes,” according to the draft. “Given the lead times and investment cycles in the sector, these must be initiated immediately.”

Chancellor Angela Merkel’s government last week pledged to eliminate greenhouse gas emissions by 2045, five years earlier than its previous goal and the shortest timeline among major economies. Her cabinet is due to sign off on the law on Wednesday before it goes to parliament for approval.

The coalition’s hand was forced after Germany’s highest court ruled last month that the existing climate protection law put young people’s futures at risk by leaving most emissions cuts until after 2030.

The two main ruling parties -- Merkel’s conservative Christian Democrats and her Social Democrat junior partners -- are also under pressure to prove their environmental credentials due to the rise of the Greens party, which is leading in most polls ahead of September’s national election.

The text of the draft law says that since the legislation will provide more climate protection in the short to medium term, it will prevent the burden of cutting greenhouse gas emissions being shifted to future generations. It will also provide “more orientation and planning security” for society and industry.

Getting to net zero by 2045 will be a huge challenge for Europe’s biggest economy, a manufacturing powerhouse that is home to companies like Volkswagen AG and Bayer AG and emits proportionally more carbon than its peers on the continent.

Germany will have to cut emissions not just from the electricity sector, but also from transport, agriculture and factories making steel and cement that don’t yet have economical clean alternatives. The nation’s exit from coal power by 2038 and its expansion of renewables such as wind and solar energy would have to be accelerated.

In the new law, Germany is targeting a more ambitious goal of cutting emissions by 65% below 1990 levels by 2030. However, that would still not be compatible with the terms of the Paris Agreement and a target of at least 69% is needed, according analysis by the Climate Action Tracker.

“Germany’s proposed 2030 targets are not quite there in terms of Paris Agreement compatibility,” said Niklas Hoehne of NewClimate Institute, a non-profit group that supports research and action against climate change. The government’s targets for coal, renewables and especially transport are deficient, he added.

To help finance the transformation, Economy Minister Peter Altmaier has proposed establishing a private fund that would be able to take on debt without it showing up in the federal government’s accounts and breaching constitutional limits on borrowing.

The new law, which updates one passed in December 2019, also suggests public-infrastructure planners should take into account a set carbon price when planning projects and their likely emissions. Until now, planners have only had to consider the environmental impact.

(Updates with chart, detail on public infrastructure projects)

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