The regulatory market economy dimension of climate change will affect European industry sectors much earlier than the environmental-climatic dimension, writes Eric Heymann in a 5 July research paper for Deutsche Bank.
The research finds that for many industrial sectors, the opportunities presented by climate change outweigh the risks. Research and development are the keys to success for companies, the author adds.
The renewable energy industry will continue to benefit from government subsidies motivated by climate policy, Heymann observes. Moreover, government measures will tend to make fossil fuels more expensive. Thus, research and development of new and more efficient energy technologies will play a leading role in the future, he believes.
Industry sectors set to benefit from tackling climate change and its negative consequences include mechanical engineering – such as air-conditioning, heating, ventilation, and irrigation – and electrical engineering – such as energy-efficient household appliances, Heymann claims. Both sectors have enormous growth opportunities, he adds.
The paper states that climate effects are already noticeable in agriculture and forestry. In addition, prices for agricultural products could rise due to the increased demand for biofuels, it speculates – anticipating competition between food production and biofuels. Meanwhile, agricultural irrigation and genetic technology will gain in importance, the author forecasts.
The construction industry is set to profit from the energy-related refurbishment of existing buildings, such as insulation requirements, Heymann believes, adding that repairing the damage from extreme weather events can trigger temporary and regional special business activities.
Regarding the services sector, there will be heavier government burdens on the transport industry, Heymann expects – both financial and regulatory, such as higher taxes on road transport and increased fuel costs. Rail transport can benefit from government subsidy programmes, he adds.
The author concludes that as the regulatory market economy dimension of climate change has the greatest effect on industry, policymakers must clearly be responsible for creating reliable planning conditions for all economic players, by announcing climate policy measures as early as possible.
Companies that prepare early for the regulatory, price and climatic changes will have enormous export opportunities, he adds.