Germany’s blue-chip companies could face billions of euros in costs to cut carbon emissions under a climate protection plan due to be unveiled by the government on Friday, according to a study by asset manager Union Investment.
“According to our research, almost every one of the (30) DAX companies will be facing big challenges, even under low CO2 price scenarios,” said Henrik Pontzen, head of environmental, social and corporate governance at Frankfurt-based Union Investment’s portfolio management business.
Germany, which is responsible for just over 2% of the world’s greenhouse gases emissions, mainly aims to cap carbon emissions from buildings and transport.
Its utility sector has already made substantial reductions, forced by mandatory carbon permit trading (EU-ETS) in Europe that incentivises carbon efficiency.
But the country is on still track to miss targets to cut greenhouse gases emissions, of which CO2 is the main one, by 55% in 2030 from 1990 levels, having achieved less than 30% so far.
Union Investment said that putting a carbon price on areas not captured by the ETS could cost the DAX group of companies 5.2 billion euros ($5.7 billion) a year, an estimate it based on a price of 30 euros a tonne of CO2 equivalent.
This sum would be equivalent to 3.7% of the cumulative operating profit of the combined DAX group in 2018, it said.
It said possibly heavily affected companies included chemicals firms BASF, Covestro and Linde; steelmaker ThyssenKrupp; automotive companies BMW, Continental, Daimler, and Volkswagen; and building materials firm HeidelbergCement.
Berlin appears likely to set up a separate CO2 trading system for lagging sectors before integrating them into the ETS, while there are also proposals to impose CO2 taxes on them.
The C02 contract for December expiry on the ETS, which covers half of all polluting industries in the EU, is currently trading at 25.5 euros a tonne CFI2Zc1.
Pontzen said financial services and telecoms companies such as Allianz and Deutsche Boerse would be able to react quickly because they could replace their electricity needs with purely renewable energy-derived power.
“It will be decisive in the medium and long run, how fast companies can adjust their energy supply, modify business models and to what degree they can pass on additional costs to consumers,” he said.
By Vera Eckert
France has launched an offshore green hydrogen production platform at the country’s Port of Saint-Nazaire this week, along with its first offshore wind farm. The hydrogen plant, which its operators say is the world’s first facility of its type, coincides with the launch of another “first of its kind” facility in Sweden dedicated to storing hydrogen in an underground lined rock cavern (LRC).
The project sets up the Hydrogen Valley in Rome, the first industrial-scale technological hub for the development of the national supply chain for the production, transport, storage and use of hydrogen for the decarbonization of industrial processes and for sustainable mobility.
At first glance, hydrogen seems to be the perfect solution to our energy needs. It doesn’t produce any carbon dioxide when used. It can store energy for long periods of time. It doesn’t leave behind hazardous waste materials, like nuclear does. And it doesn’t require large swathes of land to be flooded, like hydroelectricity. Seems too good to be true. So…what’s the catch?