Environment and Energy

Environment and Energy

Environmental and energy policies is expected to achieve its ecological objectives at the lowest possible cost and without creating social problems.

Germany can only achieve sustainable development if climate protection is instituted efficiently, energy is made available in an affordable, safe and environmentally friendly form and business has access to natural resources. If this can be achieved, companies can take advantage of the market opportunities and locate their future development in Germany.

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Despite the turnaround in energy policy announced by the last Government, Germany will continue to need fossil fuels for some considerable time to come.

Germany is staking its future on renewable energies to a greater degree than any other country. Biomass and wind power, for example, already meet a large proportion of Germany’s energy needs, not only for electricity generation but also for heating and transport. While renewable energies help the climate and reduce dependence on fossil fuels, manufacturing and operating the necessary plant also present good business opportunities for German companies. For the foreseeable future, however, Germany will not be able do without fossil fuels. As a transition technology, nuclear energy also makes an important contribution to the energy supply

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Green Economy is a new model of economic development. Its aim is to manage the economy in harmony with nature and the environment.

Achieving this aim requires a complete modernization of the economy. While new green sectors are created, existing branches of industry are ‘greened’, a process which includes changes in how we deal with resources and emissions. For example, product design and production processes must be adjusted to ensure that there is less waste and lower consumption of raw materials.

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To counteract climate change, emissions of carbon dioxide must fall significantly. Climate protection may be expensive but the alternative –doing nothing now and gradually adapting to the eventual consequences of climate change – would be considerably more expensive.

For the climate it matters little how and where on the earth CO2 is saved. Climate protection should therefore start where it is as inexpensive as possible. Unfortunately, environmental policy often resorts to instruments which cause unnecessarily high costs. A great deal more could be done to protect the climate for the same money.

Yet even the best climate policy is to no avail if practised by only some countries. Europe, and certainly Germany, are much too small to limit climate change on their own. Going it alone also carries the risk that industries will move to countries which do not restrict their emissions. For this reason, not only the industrialised but also threshold and developing countries should commit to CO2 reduction.

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More than 70 per cent of fossil-based sources of energy – oil, gas and coal – originate abroad. German companies also import many of the metals needed in industry.

The economic success of the manufacturing sector thus depends on metal prices, which, as shown by the industrial metal price index maintained by the German Economic Institute (IW), have more than quadrupled in the last decade. The index weights such raw materials as copper, aluminium, iron ore and gold according to their share in German imports. The increasing prices of metals and fossil fuels are forcing companies to use these raw materials more economically, for example by recycling them and deploying more efficient machinery.

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In the last two decades, passenger traffic in Germany has doubled and freight traffic actually trebled. Transport infrastructure, however, has long been suffering serious neglect.

Damaged surfaces, road works and traffic jams at long familiar bottlenecks continue to dominate the picture. Investment in roads is not keeping up with need. In recent years, federal, state and local governments have invested only a quarter of their revenues from taxes and levies on motorists in the road network.

Despite the growth in traffic, carbon dioxide emissions from road vehicles have recently fallen below the 1990 level. Technical progress has lowered the average fuel consumption of motor vehicles considerably. Changing the basis of road tax from engine capacity to carbon dioxide emissions will promote this development. By contrast, the European Commission’s CO2 limit for new cars makes less sense. Nor are regulations making the addition of organic fuels compulsory an effective way of curbing emissions of the greenhouse gas.

Instead of prescribing in detail how vehicles’ CO2 emissions are to be reduced by technical means, the emission of CO2 itself should be taxed. Motorists could then decide for themselves how to respond: by buying thriftier cars, driving less or making alternative savings.

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