Speech by Federal Chancellor Angela Merkelat the Fifth Petersberg Climate Dialogue

Mr President, Mr Humala
Minister Hendricks,
Mr Calderón, my old colleague,
Ladies and gentlemen,

As Ms Hendricks just said, we heads of government are naturally pleased when our Environment Ministers solve the problems of climate protection. After all, they bear the brunt of responsibility for doing so. Thank you very much indeed to all those who are doing their job as Environment Ministers. But, if I may say it, heads of state and government like to help a bit with this major issue too.

Progress on many questions, after all, goes at snail’s pace, which is why tremendous elan and stamina are needed to tackle all the tasks at hand. 2014 and 2015 are of great, indeed vital, importance for global climate protection, because the task at hand now is nothing less than to sort out the details of a new international climate agreement. It has been agreed that the decision will be taken at the Climate Conference in Paris at the end of 2015. The agreement would then enter into force in 2020. Thus we already have the rough outline. I am delighted by the very fact that consensus has been reached on a timetable. The priority now is to stick to it. I hope we will be as successful in that as we were in agreeing on the timetable in the first place.

We are aiming for a new agreement which is oriented to the 2°C ceiling for global warming, which contains binding rules for industrial and developing countries – of course it remains clear that their responsibilities will be different –, which stimulates investment all over the world and which at the same time takes account of adaptation and risk prevention. Now the world needs to declare itself. In other words, every country has a duty to say what contribution it intends to make towards climate protection.

Which means we have already arrived at a point in the negotiations where we will be setting the course for the future. Will we succeed in effectively limiting climate change? Are we in a position to protect the resources on which humanity depends? Do we actually realise how serious the situation is? One would assume that the IPCC’s findings were well-known to everyone by now. But decisions are postponed again and again, and not taken in time.

What is needed is a turnaround, a global turnaround. Any delay will ultimately mean higher costs, as was made clear by the Stern Review. That’s why, when those of us who want to push on with climate protection are talking about how much any action will cost, we also need to say how much inaction will cost. Obviously, the more climate change advances, the heavier the cost of its terrible consequences will be. So climate protection and the safeguarding of living standards must be seen as a pair, because they belong together.

Half way between two UN conferences, the Petersberg Climate Dialogue offers an excellent opportunity for an informal exchange of views. Our partner this year is Peru, which will be hosting the next UN Climate Conference. And so I would like to extend a warm welcome not only to the President and Environment Minister, but to all our guests here in Berlin. Thank you for hosting the next conference, and thereby doing as much of the spade work as possible for Paris. We see here the global bridge from Peru to France. This bridge reflects the fact that cooperation is what is needed as we travel this sometimes difficult road.

At the UN conference in Warsaw we said that all states should announce their Intended Nationally Determined Contributions to climate protection well before the summit in Paris. Of course, individual countries are entering into specific obligations from very different starting points. So we can only make progress if we allow a broad spectrum of obligations.

However, the individual contributions must also be comparable, because transparency and clarity are obviously the prerequisites for being able to say in the end just what the individual contributions, when taken together, actually amount to. That’s why it would be good if all the major emitters at least were to present their agendas by the spring of 2015. I would expressly like to say that there have been pleasing signals. The US Administration intends to cut emissions from existing fossil fuel power plants by around 30 percent by 2030 compared to 2005 levels. China plans to announce its contribution for the new climate agreement in the first quarter of 2015. During my recent visit to China I was able to see for myself that the country’s entire leadership is very well aware of this task. Countries like Mexico, Kenya or Micronesia, to name but a few, are setting themselves ambitious goals and institutionalising their implementation.

The greater a country’s responsibilities and capabilities, the more ambitious its contributions ought to be. We in Europe are taking this principle very seriously. The European Council will therefore decide on EU-internal climate and energy targets for 2030 this October. The Commission’s proposals are, as we know, already on the table. These envisage cutting the EU’s greenhouse gas emissions by 40 percent by 2030, compared to 1990 levels, and boosting the share of renewables in total energy consumption to at least 27 percent. We expect a proposal on energy efficiency in a few weeks’ time, once the review of progress on meeting the targets of the EU Energy Efficiency Directive has been completed.

Even though the negotiations have not yet ended, I assume that, come October, we in the European Union will be sending a clear signal in favour of greater climate protection – not least because we will be emphasising that climate protection targets and supply security can be excellently combined. It is worth remembering that by increasing the use of renewables we will become less dependent on raw materials imports.

Germany will present a National Energy Efficiency Action Plan by the end of 2014. Our aim in doing so is not merely to ensure more efficient coordination of existing instruments, such as refurbishment incentive programmes, but also to introduce new, further-reaching measures. I predict that it will be a difficult process; the discussions are not yet over. However, we want to try to give some impetus to boost energy efficiency across Europe.

With regard to renewables, we could imagine a somewhat more ambitious target than the one set by the European Union. Here in Germany we are undertaking a massive restructuring of our energy supply. Already about a quarter of our electricity is produced from renewables. We aim to increase this to between 40 and 45 percent by 2025, and even to between 55 and 60 percent by 2035.

We had a long debate on amendments to the Renewable Energy Sources Act, which stipulates that renewables are to be promoted. For the first time we marked out a corridor for the annual expansion of renewables. However, like they say in football: “After the match is before the match”. In other words, the amendment is before the next amendment: we will still need to make numerous amendments and hold discussions with the European Commission.

The two pillars of the Energiewende in Germany – renewables on the one hand and energy efficiency on the other – both simultaneously underpin our overall climate goals. Germany wants to cut greenhouse gas emissions by 40 percent by 2020, compared to 1990 levels. There is still a great deal to be done to achieve this. However, we are also looking beyond 2020 and will have to find a response to the European targets. That’s why Europe wants to play an ambitious role in the Paris UN conference. In other words, we want the climate protection plan we are currently drawing up to lay down further reductions up to 2050 and identify the measures necessary to achieve these goals.

There is, of course, a good deal of talk not only about the targets, but also about the methods used to reach them. For us in Germany and Europe, emissions trading remains a key instrument of climate policy. We must and we will further develop this trading system, because substantial surpluses of allowances have built up, leading to a collapse in certificate prices. So certificates trading is not much of an incentive to cut emissions at the moment. We are learning as we go along. Furthermore, it is clear that the economic instability caused by the international economic and financial crisis and the crisis in the euro area has given the lie to many forecasts for Europe’s economic development. We need to learn, in a manner of speaking, how to take account of unexpected developments, without people having the impression that external hands are interfering in emissions trading every year. But even market economy instruments are dependent on certain conditions. That is something we must not ignore.

And that’s why we support the carbon pricing initiative being pushed by UN Special Envoy on Climate Change Jens Stoltenberg and the World Bank. We need new mechanisms for the carbon market, worldwide. The more globally the whole thing is designed, the better it will work.

A low-carbon economy is by no means a luxury affordable only to rich countries. A low-carbon economy does not mean having to give up prosperity. For instance, the Impact Assessment of the EU 2030 Climate and Energy Package concludes that economic growth will in the long term be higher with ambitious climate targets than without. Similarly, the International Energy Agency calculates that growth and climate protection can go very well together. So no one has to sacrifice prosperity. I think this is something we need to keep stressing in our discussions with the emerging economies and developing countries. Of course the industrialised countries do have a responsibility to develop technologies, processes and materials which make it possible to manufacture in a way that saves resources.

We also need investment incentives, for example for refurbishment, although it has to be said that Germany is having trouble in actually deciding on such incentives. However, it has been shown that investment is often recouped through savings in energy costs even during the term of the investment. So, as well as the system and the instruments, what we need in many cases is better information.

The same sort of thing can be said about this second example: with good conditions, new wind and solar power stations are hardly any more expensive nowadays than new coal, gas or even nuclear power stations. Today it is cheaper than ever before for countries all round the world to switch to a competitive, climate-friendly energy system. That said, investment in the use of renewables can scarcely be financed on the free market alone. So we will be dependent on incentives for quite a while yet. This in turn makes the situation in developing countries extremely difficult, because private investors there generally demand such high interest that it can hardly be generated even with state-of-the-art technologies. Against that background, many investment projects are not carried out, even though these countries afford tremendous potential for the use of renewable energy.

This is why international climate protection funding is of the utmost importance. On the one hand, it is a matter of how much money is available, on the other, what we do with it. The industrialised countries have pledged to mobilise 100 billion US dollars in public and private funding every year till 2020. What we need to do now is work together to explore ways to truly fulfil this pledge. Let me add this: we have to make sure that the money does actually get to where it’s supposed to be. We very often learn in talks with representatives of the countries concerned that there is still a substantial gap between the promise of money and its receipt.

Allow me to say that Germany is very aware of its responsibility in this regard. In the so-called fast-start finance period from 2010 to 2012, we made available around 1.4 billion euros a year. In 2013 we increased this to 1.8 billion euros. And we intend to step up our contribution again. The United Nations has established the Green Climate Fund to centralise funding. Its first capitalisation will happen this year. We will contribute to this capitalisation, to the tune of up to 750 million euros. We hope and are confident that other states too will make an appropriate contribution.

Making money available is one thing, creating a stable legal and political framework for investment is another. In some developing countries finding such a framework is still not an easy matter. That is why Germany will make this a key focus of its G7 presidency. Climate protection will also be high on our agenda as we prepare for the Paris conference.

Ladies and gentlemen, each and every one of us bears a responsibility. Climate protection can only make progress if everyone feels obliged to play their part. This requires transparency and trust. This requires a fair balance among participants, and thus also a fair balance between economic policy and climate policy. To sum up: we need a reliable global framework which everyone can use for orientation; we need a binding, comprehensive international climate protection agreement.

With the Petersberg Climate Dialogue, we have created a forum which regards itself as the pacemaker for upcoming climate conferences. I am very grateful to Ms Hendricks for inviting us to another Dialogue this year. I would also like to thank you all for deciding to come and feed in your views. Obviously, my particular thanks go to the Peruvian President and his Environment Minister for undertaking such a long journey to be with us, thereby underlining how seriously Peru is taking this climate conference. Thank you. We look forward to hearing what you have to say.