A worldwide, robust climate deal from COP21 will convince industry leaders to invest in green technology and help tackle climate change, writes Dr. Reinhold Festge.
Dr. Reinhold Festge is President of the German Engineering Federation VDMA, which represents more than 3,100 mainly small and medium sized companies producing machinery for manufacturers.
It isn’t just citizens and NGOs that truly care about a responsible environmental policy. Entrepreneurs like me care too. In fact, industrial companies might even be particularly valuable in the fight against climate change.
When 195 states meet for the Climate Change Conference in Paris from 30 November to 11 December, the German mechanical engineering industry hopes for a comprehensive and ambitious agreement. Not only because we have an obvious interest in a sustainable planet, but also because it will be good for businesses in Europe.
Not too long ago, industry in Germany had to adapt to a historic decision with significant effects on the country’s environmental policy. In 2011, following the Fukushima nuclear disaster, Berlin decided to close all German nuclear power plants by 2022.
Not every entrepreneur was excited about having energy policy turned upside down within a few weeks. However, today the German mechanical engineering industry looks at the shift to a cleaner economy as an opportunity rather than a threat to business.
As president of VDMA, I speak for 3,100 mainly small- and medium-sized companies that develop and produce machinery for manufacturers. So, when we talk about lower emissions and more efficiency in industry, mechanical engineering is at the very centre of the discussion, because in many cases our machines are the enablers for the change.
My assessment is that an ambitious agreement in Paris is technologically feasible. In fact, European industry is famous for its innovative capacity. Our companies will have a competitive advantage when global demand for clean technologies rises.
Let me give you one example. Each year, Germany brews about 100,000 hectolitres of beer. In this process, hot water of above 60 degrees Celsius is needed. This costs a lot of energy. With modern hot water pumping systems, it is possible to regulate supply streams more efficiently. In the end, brewers can save up to 47% of energy costs.
There are thousands of similar cases in every sector of European industry.
However, investments in green technologies are not simply triggered through tough environmental legislation. The framework must also take account of current and future business models and be realistic.
Firstly, industry can adapt – but not every few years. What we need is a long-term and robust climate agreement in Paris that companies can rely on. Machines can easily cost several hundreds of thousands of euros and are built to work for decades. Entrepreneurs will only invest in green solutions when they get a return on investment.
Secondly, you won’t save emissions by relocating production. This is why we need a COP21 agreement that sets standards globally. Companies worldwide need roughly the same requirements to prevent a shift of production to places with laxer environmental laws.
Under these conditions, I am confident that European industrial companies will be beneficial to the fight against climate change.
Just a few months ago, we asked VDMA’s members if they expected a cleaner approach to energy production to have positive or negative effects for their business: 62% of them consider it a future opportunity and 54% expect to enter new business segments.
An ambitious agreement in Paris is not opposed to the interests of industry. This is why it makes sense to invite industry to the table when discussing environmental policy. We are, in fact, a part of the solution.