Speech by Federal Chancellor Angela Merkel at the Seventh Petersberg Climate Dialogue in Berlin on 5 July 2016

Tuesday, 5 July 2016, 10:30 in Berlin

Minister Mezouar,
Minister El Haite,
Federal Minister Hendricks,
Ladies and gentlemen,
Excellencies,

I am delighted to be here once again this year. I still remember last year’s dialogue. At that time, we were unsure about what outcome we would be bringing back when we met again in a year’s time. Today we can say a heartfelt thank you to all the participants, especially the French Government for its marvellous work in arranging the Paris climate conference–with great skill, with great dedication, and with extensive diplomatic experience. We were very happy that Franco-German cooperation also played a truly positive role.

When Minister Mezouar thanked Christiana Figueres just now and wished Patricia Espinosa all the best and I looked around at the women who are the Environment Ministers of Morocco and Germany, I thought: gender equality has already progressed quite a lot in relation to climate protection, and women are playing a strong role in its success. I hope Minister Mezouar can handle my saying this. Of course, I too wish the very best to the new Executive Secretary of the Secretariat of the United Nations Framework Convention on Climate Change and once again thank Christiana Figueres very much for the work she has accomplished.

As I have already mentioned to Ms Hendricks, I am a bit envious of her upcoming trip to Marrakesh, a place where I have never been in my life. I think Morocco will be a wonderful host.

We find ourselves—here at what is now the seventh Petersberg Dialogue—in a new era, for there is now a binding global climate agreement. Alongside the many difficulties of the past year, it was really good news that this succeeded. We can state that in Paris the whole global community pledged to curb climate change for the first time. All of the countries committed themselves to the goal of keeping global warming below two degrees and, if possible, limiting it to 1.5 degrees. All of the countries agreed to do their part. Their contributions will be reviewed every five years and adjusted in reference to the global target. The Paris Agreement is thus proving to be a historical milestone in international climate protection. It is a sign of hope. It can have a positive influence on the living conditions of billions of people.

The parents of this Agreement can be truly proud. People have put a lot of their hearts and minds into the negotiations in recent years. I would also like to underscore that major actors who were not so active for many years—here I want to mention the United States and China—helped a lot in bringing about this Agreement, and also carried along many others. In this respect, the signs are looking quite optimistic in this situation.

As the apt saying from football goes, after the game is before the game. Thus, the process is continuing. We have a new stage before us. If one thinks this through carefully, the matter becomes even more serious. Obligations have been taken on. And now they must be honoured. As we in the Federal Government are currently in the process of coordinating our climate protection plan, I surmise that this will still demand a great deal from many others, too.

But for a start we can say that no international agreement has ever previously been signed by as many countries as quickly as the Paris Agreement. On 22 April of this year, UN Secretary-General Ban Ki-moon hosted a celebratory ceremony in New York. More than 170 countries took this as an occasion to sign the Agreement. The Agreement only enters into force when it has been ratified by 55 countries which are responsible for at least 55 per cent of global greenhouse gas emissions. Some countries—above all, threatened island nations—already ratified the Agreement at the ceremony in New York. Additional countries—including the United States and China—have announced their intention of taking this step this year. This is very important.

We as the Federal Government will be dealing with the bill for ratification of the Paris Agreement tomorrow in the Federal Cabinet. We want to attempt to complete the entire process before the climate conference in Marrakesh. We want to then present the instrument of ratification together with the European Union and the other Member States and thereby to send a clear signal that Europe is implementing the outcome from Paris and is pulling together in the same direction when it comes to climate protection.

A great many things are in motion, not only in Europe, but in every region of the world. The global transformation has already begun. The expansion of renewable energy sources is developing with especially rapid momentum. Last year global investment reached a new record high of 286 billion US dollars, meaning that more than twice as much was invested in renewable energies as in fossil fuel power generation. This is an absolutely clear sign. This welcome global trend is a result of better framework conditions, lower costs and concrete expansion targets. The task now, of course, is to make this trend a permanent one.

In Germany, the shift to green energy has set a clear course in any case. By the way, we will be holding the second and third readings of the 2016 Renewable Energy Sources Act in the German Bundestag this week. With this law, we will be beginning a new phase. Renewable energy sources are already the most important pillar of energy production in Germany. We will now be shifting from supported prices that are fixed by the Government to a tendering process. This is a qualitative leap forward.

We in Germany have already set ambitious targets for ourselves. However, the expansion of new pipelines is turning out to be a bottleneck here, and also requires a very high level of acceptance from the public. We still have a lot of outreach to do in this area.

We are not the only ones who have set ourselves ambitious targets. India, for example, wants to develop 175 gigawatts of renewable energy by 2022—including 100 gigawatts of solar energy. The country has also announced that it is doubling its tax on coal extraction. The revenues from this tax are to be dedicated to environmental projects. China will be tripling its solar capacity by 2020. We are looking forward very eagerly to the introduction of emissions trading in China in 2017. Morocco, the host country of the next COP, will raise the share of renewable energy sources in its energy capacity to 42 per cent. This too is a highly ambitious target.

One can say, then, that things are moving forward. But we need progress not only in the area of energy, but rather in all sectors: in business, in transport, and in private households. In my view, three aspects of the Paris Agreement are especially important here: we need to develop long-term strategies, we need to further develop our climate contributions regularly, and we need conclusive answers to questions regarding funding and incentives.

Regarding the first point: the fact that we need long-term strategies is obvious because we have determined that we will make this century a century of decarbonisation. This will be especially dependent on long-term investments, both public and private. The Global Commission on the Economy and Climate estimates that by the year 2030, more than 90 trillion US dollars will be invested worldwide in infrastructures, including for energy, transport and water. The task here is to shape these investments in a climate-friendly way. It is interesting that the extra costs associated with this are actually quite low. They are estimated to lie between 0.3 and at most 4 per cent added onto the investment costs. But in return, we will have climate-friendly investment. I do not want to play down these additional costs. But we have known at least since the Stern Review that in the long term –and in fact even in the medium term—they pay for themselves. When we consider what consequences of climate change we will otherwise be in for, we know that this is certainly worth it.

This means that the success of Paris will in practice play a crucial role in determining what investments are made in the coming years. At the end of May, the G7 countries agreed at their summit in Japan that they would take on a leadership role on this issue and would present their respective strategies well before 2020. The work on this has already begun. I previously mentioned the climate protection plan that we are working out in Germany and that describes the steps towards the target of lowering emissions by 80 to 95 per cent by 2050 in comparison to 1990 levels. The year 2050 is really not so far away anymore. It is now 2016, so we have less than 35 years left until then. If one considers the lifespan of power plants and many other things, one sees that this timespan is in many cases only one investment cycle long. The target of 80 to 95 per cent contains quite a large margin. This is precisely the focus of the political discussions that the Federal Environment Minister currently has to expect.

At EU level, we have agreed that if at all possible, we will develop a climate strategy for the coming decades by 2018. Work is also underway on long-term plans in the United States and Canada. Ultimately, all countries are called upon to develop long-term strategies—not only with an eye to climate protection, but also with an eye to future opportunities for growth and prosperity: Ultimately, the question of whether we are even able to have a successful economy at all is at stake in climate protection. That is why the Paris Agreement and the 2030 Agenda for Sustainable Development, upon which the international community also agreed last year, are so closely connected.

Along with long-term strategies, we also naturally need concrete climate contributions quite soon. This is the second crucial point when it comes to breathing life into the Paris Agreement. The fact that all countries have offered voluntary climate contributions is very welcome. As the Foreign Minister has said, however, the sum of these contributions is not enough to keep warming below the two-degree threshold. That is why it is so important to us for there to be a revision every five years. These revisions will certainly be painful too, because one will be able to see very clearly how far we have come. I have recently had another look at the rise in global CO2 emissions. The series of figures from 1990 to the present day looks truly threatening.

Germany and Europe are adhering to an ambitious mechanism. We are prepared to improve. We in the European Union have set ourselves the target of reducing our greenhouse gas emissions by 2030 by at least 40 per cent compared to 1990. We have formulated this as a minimum target. We are, then, leaving quite open the possibility of changing this contribution once again after further reviews. I want to say, however, that even achieving a 40 per cent reduction is definitely ambitious. We will once again be holding discussions about burden sharing on the basis of the recommendations that the Commission is developing.

Targets are fine, but they must be backed up by reasonable funding. This is the third component. The Paris Agreement obligates us to reconcile our financial flows with low-emission, climate-friendly development.

The starting point is the positive thing that remained from the Copenhagen conference, which is the pledge to provide 100 billion US dollars annually to poorer countries from public and private sources beginning in 2020. In Paris this pledge was affirmed and extended to 2025, at which point a new funding target must be agreed. A roadmap for how these 100 billion dollars are to be attained by 2020 is currently being developed in a working group of industrialised countries. At this point I would also like to say that the OECD has provided a great deal of support to us on many aspects of all of these issues.

With numerous funding pledges and initiatives, the industrialised countries are already on a good path. The G7 is also playing a sound role in this. When we in Germany hosted the G7 last year, we launched some concrete initiatives. By 2020, Germany intends to double its contribution compared to 2014. But of course we also know that public contributions are only one part of the equation. We also must interlink them with private investments in a savvy way.

Development banks play a key role in this. The World Bank, the Asian, African and Inter-American Development Banks, and not least the European Investment Bank all want to increase the contribution to climate financing in their portfolios considerably. In this sense, development banks are, so to speak, also strategic trailblazers for private investments. At this point I would like to emphasise that what matters at the end of the day for all affected countries, especially for small island nations, is that the money really arrives. At some point, the moment of truth comes. Then there is no more theoretical juggling of funding amounts. Projects need to be realised. We need to really produce what we have promised.

A large number of private investors are acting of their own accord. In this connection I would like to mention the example of the Carbon Disclosure Project, which is supported by more than 820 institutional investors with assets of more than 95 trillion US dollars. This CDP initiative calls upon companies worldwide to disclose their CO2 emissions and their climate risks.

A working group of the Financial Stability Board, that is, the international body for overseeing the financial system is currently working on recommendations for the disclosure of climate-related risks. I find this to be a very interesting contribution. Previously when one spoke of the FSB, it was generally when dealing with banks that were of systemic relevance or shadow banks. But the fact that this body is now also engaging with climate-related risks shows that climate protection is finding its way into the broader issue of the global financial system. Given that the global financial system has already placed many burdens on us, it would be nice if the global financial system played a more positive role in the issue of climate protection than it did during the financial crisis of 2008 and 2009.

These are all very good approaches. Some things have started to move. More than 90 countries, which together are responsible for 61 per cent of global emissions, also want to use national or international market mechanisms of placing a price on carbon. I think that here we can learn from one another how these systems can be shaped. We know from European experience how difficult this can be and how closely tied it is to economic development. What might have been expected as an automatically functioning system 20 years ago nonetheless must be coupled with economic development in a savvy way, of course.

At this point I would like to say again that I consider this to be a correct approach. A carbon price directs investment towards low-carbon infrastructures, technologies and products. Such a price ensures that emissions are reduced in the places where it is possible to do so in an especially cost-efficient way. It also yields public revenues that can be used for climate finance both domestically and abroad.

Of course, questions of international competitiveness arise very quickly in this context. That is why we are also following China’s actions with close interest. That is why we wish for other countries with which we compete to also take similar steps. That is why we need a global carbon market in the medium-to-long term so that we can have truly fair conditions for competition. In the field of finance this is known as a level playing field. We need this to avoid ending up with permanent readjustments and exceptions. We still have a lot of work to do in grappling with this.

Last year, as part of the German G7 Presidency, we started a platform to foster international dialogue among governments in order to explore forms of cooperation for developing a global carbon market. At this point I would like to highlight the activities of the World Bank Group and the International Monetary Fund to promote global carbon pricing, which I gladly support. As you have probably noticed, the OECD, the World Bank and the Financial Stability Boards are all now involved in these activities. Years ago this was not the case. And this certainly shows that this trend is going to become much more pronounced.

Price incentives will play an increasingly important role in international transport. World population growth suggests that we will have to expect further growth in the transport sector. That is why we face an important decision this autumn at the Assembly of the International Civil Aviation Organization. We want to adopt a binding global market-based measure through which further growth in aviation beginning in 2020 is to become climate-neutral. This is to be achieved through project-based offsetting of emissions.

In addition, we should harness the momentum from Paris for a second major project this year and agree upon the reduction of partly fluorinated hydrocarbons that have an impact on the climate under the Montreal Protocol. This too would be a significant contribution to complying with the provisions that were set in Paris.

On the whole, we can state that sticking with the multilateral approach after the disappointing Copenhagen conference in 2009 paid off for us. Protecting the climate is a global task that can only be dealt with globally. Of course, we are aware that we hold differing degrees of responsibility for climate change, that its consequences impact us differently, and that we have different opportunities to meet this challenge. This remains our philosophy, from the Kyoto Protocol to the present day. Nonetheless, a lot of things have changed dramatically since Kyoto, including the global role of economies. That is why it is so important that the major industrial nations are taking on a leadership role. We will attend to the questions connected to this, especially during Germany’s G20 Presidency. Next year Germany will host the G20 Summit. In doing so, we will work very closely with the OECD once again.

We as a global community on the whole depend on the emerging economies and developing countries pursuing, or being able to pursue, a path of transformation. In this area, we want to lend our support to developing nations, especially through a global partnership that was initiated by Germany. I am pleased that Environment Minister Barbara Hendricks and Development Minister Gerd Müller officially launched this initiative yesterday. In this initiative, governments around the world and international institutions support developing countries in the drafting and implementation of their national climate strategies. At the same time, these national climate strategies also serve the goal of overcoming poverty and opening up new economic prospects.

Initial talks this spring showed that there was interest on all sides—among donors, multilateral organisations, and the countries themselves. This is encouraging. The first concrete outcomes regarding the shaping of global partnership are to be presented in Marrakesh. Germany has pledged to finance a secretariat and to provide support in terms of staffing. It is to be led by the World Resources Institute and headquartered in Bonn and Washington. We also want to support the new partnership through our International Climate Initiative and within the framework of our development cooperation.

Ladies and gentlemen, the Paris Agreement points us in the right direction. I have tried to make clear that while this path has been pointed out, we have not yet begun to follow it; that we have many partners in walking this path; and that we also still have many obstacles to overcome. The task at hand is to create and safeguard prosperity—and to do so not at the cost of the foundations of life, but rather on a sustainable path. It is no exaggeration to say that climate protection is no more and no less than a question of survival. Let us therefore breathe life into the climate agreement.

Thank you very much.

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