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Germany: Declaration by German Industry and Trade on Global Warming Prevention (1995) and Updated and Extended Declaration by German Industry and Trade on Global Warming Prevention (1996)*
Case Study 3: Germany: Declaration by German Industry on Global Warming Prevention (1995) and Updated and Extended Declaration by German Industry and Trade on Global Warming Prevention (1996) | |
---|---|
The Environmental Issue | 1995 & 1996 Version: Climate change/global warming – focus on CO2 emissions |
Target | 1995 Version: up to 20% specific
CO2 reduction by 2005 with a base year of 1987 – for
combined sectors (one association offered an absolute target for
2015) 1996 Version: 20% specific CO2 reduction or specific energy consumption by 2005 with a base year of 1990 – for combined sectors with separate targets for each association (12 associations offered absolute targets) No targets for companies |
Start Date | 1995, updated 1996 |
Timescale | Continue until at least 2005, and until 2015 for electricity |
Number of Signatories | 1995: Version 17 1996: Version 21 + RWI There are no real ‘signatories’ as there is no signed contract, with the exception of RWI , the external verifier |
Parties | 1995 Version: 15 Associations (5 with BDI
representing part of its members) 1996 Version: 19 Associations (5 with BDI representing part of its members) No individual companies Ministries of Economics, the Environment RWI (Monitoring role) following 1996 version |
Type of EA | EA – target based (total & specific energy savings & CO2 reduction targets). Mainly process based |
Sanctions/ Enforcement Mechanism | None in the 1995 or 1996 EA Only public pressure |
Other provisions/ principles | Many potential future issues as part of EA revision process, e.g. some discussion of bringing in carbon/energy tax and waste heat ordinance for free-riders |
Legal Basis | None – Gentlemen’s agreement, ‘morally’ binding |
The 1996 EA covers 19 associations from a broad range of industry sectors, as listed in Table 3.1. Together they represent around 80 % of Industrial Energy Consumption and over 99% of public electricity production. Though some statistical and methodological problems are yet unsolved (regarding the targets, sector definition, and numbers counted twice), the 1996 EA contains four associations more than the 1995 EA and more associations are expected to join in the future. Not all signatories noted the level of representation or coverage of their sector in the EA declaration. Where available, data are noted in Table 3.1. Ideally the EA should note the number of companies, the share of the market, and the number of employees. This would allow the non-expert to interpret the importance of the EA more easily. Even now, not all sectors of the economy are covered; important sectors like those of investment and consumption goods as well as food are missing.
As shown in Table 3.1, the EA signatories include some of the most important industries in Germany, representing thousands of companies and over a million employees.
Many of these associations have representatives in both the old states and the new, eastern states where there has been significant plant closure, refurbishment and new plant creation. This activity has led to significant reductions in energy consumption, energy efficiency improvements and CO2 reductions. These changes clearly are not the result of explicit initiatives to reduce CO2; they are due to attempts to meet national and association targets and are better seen as a result of German unification (sometimes called ‘wall-fall’ gains). This has important implications for target setting and for assessing whether these are easy to meet or not (see Section 3.7).
In addition, many of the large companies have subsidiaries in other sectors and are active in mergers and acquisitions. This can be important for issues of sector classification, the setting of targets and the appraisal of performance against targets, especially over longer stretches of time.
Finally, a further institutional issue in Germany is that of local and regional monopolies in energy supply. Each monopoly can generate and distribute energy. This can lead to inefficiencies where supply exceeds demand and captive markets mean that there is less incentive to increase generation efficiency. The EU is, however, committed to the development of the internal energy market and this is expected to increase competition and, therefore, to improve the efficiency of energy production and distribution, with possible energy and CO2 gains.
Table 3.1: EA Association Coverage – 1996 Revised and Updated EA
Sector and Association | Employees | Market Coverage / Share | |
---|---|---|---|
1 | Cement: Verein Deutscher Zementwerke e.V. VDZ (part of Bundesverband Steine & Erden) | ||
2 | Brickworks: Bundesverband der Deutschen Ziegelindustrie e.V. (BDZ) |
14,000 |
300 heavy clay works |
3 | Limestone: (part of BDZ) Bundesverband der Deutschen Kalkindustrie e.V |
5,500 |
|
4 | Refractory/fireproofing industry, (part of BDZ) |
9,000 |
80 |
5 | Ceramic tiles and panels: (part of BDZ) Industrieverband Keramische Fliesen + Platten |
Ass: 15 ; Ind: 30 80% of turnover |
|
6 | Glass & Mineral Fibre: Bundesverband Glasindustrie und Mineralfaserindustrie e.V. | ||
7 | Potassium: Kaliverein |
Ass: 99% of producers |
|
8 | Paper & Pulp Paper: Verband Deutscher Papierfabriken e.V. | ||
9 | Chemical Industry: Verband der Chemischen Industrie (VCI) |
530,000 |
Ind: 1518 chemical companies; Ass: 95% of companies, >99% of turnover; and over 200-300 equipment suppliers |
10 | Non-ferrous Metals: Wirtschaftsvereinigung Metalle | ||
11 | Steel: Wirtschaftsvereinigung Stahl |
136,000 |
|
12 | Sugar: Verein der Zuckerindustrie | ||
13 | Textiles: Gesamtverband der Textilindustrie | ||
14 | Oil refining industry: Mineralölwirtschaftsverband (MWV) | ||
15 | Gas and Water: Bundesverband der Deutschen Gas – und Wasserwirtschaft e.V. (BGW) | ||
16 | Electricity generation: Vereinigung Deutscher Elektrizitätswerke – VDEW – e.V. |
200,000 |
Ass. 750 Ind: 1000 99% of public electricity generation, 86% of total elec. use |
17 | Industrial Energy Consumers & Auto-producers: Verband der Industriellen Energie- u. Kraftwirtschaft e.V. (VIK*) |
almost 14% of total electricity production |
|
18 | Association of municipal enterprises: Verband kommunaler Unternehmen e.V. (VKU) |
168,000 |
Ass.: 900; 28% of public power supply (gas & district heating) |
19 | Bundesverband der Deutschen Industrie e.V. (includes 1-14 above) |
n/a |
n/a |
Source: EA (1996), Updated and Extended Declaration by German Industry and Trade on Global Warming Prevention: BDI, Cologne, Germany
* The VIK has acquired a number of new members
recently, including the German Industry and Trade Congress, the
Association of Technical Inspectors and Organisations, and the Federal
States Organisations.
History of Environmental Regulations, Environmental Policy Approach
Environmental regulations are all more or less in place in Germany and recent interest has been moving towards the use of alternative instruments, such as environmental taxes and charges, the EMAS scheme and voluntary measures, such as labelling o0 specific environmental agreements (or, as some prefer to call them, negotiated agreements). Furthermore, the development of regulation and instruments to address environmental concerns has taken place within the context of regular discussions between government bodies (national, regional or local) and industry.
3.2.1.2 History of Environmental Agreements in Germany
The interest in EAs started in Germany in the 1970s. Around 60 EAs have been signed to date (including the EA being examined here). Nearly all (around 90%) of previous German EAs were product-focused beginning with the EA on CFCs and dangerous substances, whose success was facilitated by the limited number of producers (only one in three) involved. The need for EAs in Germany should be seen in the context of a number of factors:
The Climate Change EA responds to the threats of global warming, and is a key element in Germany’s promise to meet its nation-wide CO2 emissions reductions targets of 25% reduction (with respect to the level in 1990) by 2005 which was agreed in Berlin, and resulted from the Rio Declarations. It is especially important to Germany to meet its targets as it will be acting as an example to the rest of the industrialised world (German targets are the tightest), and also as a statement to the developing world that Germany is serious about carrying out its share of reductions and embracing the special responsibility that industrialised nations have with regard to the level of CO2 in the atmosphere: current and short-term projected rises are attributable, mainly, to existing CO2 emissions levels in the industrialised countries.
The idea of an environmental agreement to address the climate change problem was first discussed between the German government and industry sectors in 1990/91. The associations involved at this stage were the VDEW (electricity), the VIK (energy and power) and the VCI (chemicals). These associations represented the main energy suppliers and users, and so were the most important in addressing the climate change problem, and had the most to ‘lose’ if the discussed carbon/energy tax was to be introduced.
As it became clear that an agreement could in, principle, be reached, other parties, including the BDI (the German industry association), were brought in. Given the BDI’s role of representing most sectors of German industry, it was, in 1995, given overall control of the development and negotiation of the EA. Fifteen associations were party to the agreement in 1995, and a further four joined in 1996.
During the negotiations towards the first version of the EA, the level of public participation was low; only the associations and the Ministries of the Environment and Economics were involved. Neither NGOs, Länder nor Municipalities had a role in the negotiation of the 1995 EA. The reason cited for this is that it was felt that involvement of additional bodies like these would slow down the negotiation process. At this stage, therefore, the only role these parties had was to comment on or criticise the EA when its contents were made public. In fact, the publication of the 1995 EA led to significant public criticism, especially by NGOs (both environmental campaign groups and research institutes). This contributed to the introduction of a number of positive changes (which are discussed in Section 3.5).
From the company perspective, the main reasons for joining the EA were:
From the government perspective, the main reasons were:
The expected benefit was, therefore, that industry would reduce emissions of CO2 and help to meet the national targets, while not being burdened by the costs of an inflexible approach to meeting these targets.
3.3.3.1 Overview
While the discussions on EAs started around 1990, it was only with the growing expectations of the Rio Conference/UNCED, that the climate change issue assumed greater political significance and governments started to look seriously for solutions, particularly in the form of a carbon/energy tax and the use of Environmental Agreements. Industry associations discussed the EA alternative to the carbon/energy tax with the government. These discussions were initially very positive, but the momentum towards agreement was not sustained. However, with the impending Berlin Conference in 1994, the need for tabling some German proposal led to renewed interest, and ultimately offered sufficient incentive to reach an agreement (Table 3.2).
Table 3.2: Chronology of Climate Change EA Negotiation
Date | Event |
---|---|
1990 | First discussion of EA |
1991 | Initiative Paper written – basically a letter of intent |
1992 | Discussions slowed down, entrenched positions of government and associations |
Dec. 1994 | Impending Berlin Conference made progress on EA more important and discussions started to progress |
Government started raising the stakes by
threatening to implement measures which would be costly to the
association members:
|
|
March 1995 | Publication of EA |
April 1995 | Berlin Conference |
1995 | Significant criticism of EA as being little
more than a ‘no-regrets’ option – on monitoring, targets, transparency,
verification, and as being even less than business as
usual;
Discussions re-started on how to improve EA. |
1996 | New EA launched which addressed a number of
the above points:
|
3.3.3.2 BDI Perspective
After prolonged contacts and discussions, the Government started the process of negotiating the EA with the BDI and external associations (such as the VDEW and VCI). This is in line with the German consensus approach to business regulation.
To meet the timetable, there was a need for the associations to get support from their members. The EA was attractive because it offered flexibility, whereas a tax would not.
The targets were agreed on the basis of reduction in specific energy use and specific CO2 emissions and not for absolute emissions or energy consumption. It was felt that this was more realistic as companies would know more about the efficiency of production processes than about future market shares. The initial targets agreed reflected the anticipation of possible efficiency gains and other emission reductions measures by the member companies involved.
3.3.3.3 Ministry of Environment Perspective
The Ministry of the Environment was the first promoter of the CO2 EA and had the first contact with the associations. The Ministry of Industry was then brought into the negotiations. The EA should be considered against the backdrop of 10 years of negotiation on the carbon/energy tax. In the Ministry there are two separate positions on appropriate instruments for reducing CO2 – the traditionalist (regulations, standards etc.) and the EA/collaborative/consensus positions. The latter position was accepted: it was decided that the EA would be the instrument to help meet the German CO2 reduction targets set by Helmut Kohl (a 25% reduction from 1990 to 2005).
The aim of the EA was to create a process. The aim was not to have a 1995 statement that would be binding until the year 2005 (though it was not clear from the associations that they held the same view). The EA is a dynamic process, a continually developing tool.
This EA is a gentlemen’s agreement, with no particular requirements at the company level. This sets it apart from the Dutch system, and indeed, from the current Commission recommendations/framework.
The Government regard this EA as a process and intend to offer regular revisions incorporating new elements to improve the EA and respond to public comment/criticism. To date, (see Sections 3.6 & 3.7) significant public criticism has been offered and several items of it have already been incorporated into the 1996 revision of the EA (see Table 3.3). However, even the new EA has been criticised (e.g. Wuppertal Institute 1997), and some of these criticisms are likely to be taken into account in future revisions.
The government already envisages that the EA will be revised again in 1997, with a special focus on joint implementation. It will also move more towards product-specific measures and targets (especially for the production of potentially CO2-saving goods for other sectors, such as households) e.g. better insulation. The government also aims to include other associations in the agreement, for example, the Association of Household Appliances (ZVEI). They are also looking into the idea of including electricians` and boiler workers’ associations and the communication and transport sectors in the agreement. Further ideas on how to improve the EA are given in Section 3.8.
Table 3.3: Targets, Energy and CO2 Emission Shares of the Associations
Sector |
Energy and electricity consumption (PJ) 1990 |
Past Improvements in energy use & CO2 emissions |
Reference Energy & CO2 Emissions |
Progress |
Target |
|||
---|---|---|---|---|---|---|---|---|
Energy |
Elec. |
1987 |
1990 |
1995* |
2005* |
|||
1 | Cement | 109.5 | 13.2 | [KJ/kgC] Old: 3130 New: 4250 Total: 3510 |
[KJ/kgC] Old: 2990 New: 3980 Total: 3200 |
[KJ/kgC] Old: 2950 New: 3180 Total: 3000 |
[KJ/kgC] All: 2800 20% sp. En. Red. Cf. ‘87 |
|
2 | Bricks | 24.3 | 2.2 | Specific CO2 emissions in 1990, 25% of 1975 figure, energy consumption 40% lower | [kgCO2/fired bricks]
Old: 1935 New: 3100 |
[kgCO2/kg fired bricks]
All: 1645 Old: 15% red. Sp. CO2 New: 70% red. Sp. CO2 |
||
3 | Lime | 31.1 | 2.6 | [kgC/t lime] 167.5 |
[kgC/t lime] 142 Red. (sp.): 15-20% Red. (tot.): 20% |
|||
4 | Refractory industry | 8.1 | 1.0 | Old: specific CO2 emissions over last 20 years reduced by 15% | [kgCO2/t] Old: 308 New: 1502 (’91) |
[kgCO2/t] Old: 283 (’95) New: 738 (’95) |
Old: sp. CO2 red: 15% to 20% | |
5 | Ceramic tiles/panels | 9% red in sp. Elec. Consumption1980: 2723 kWh/t ceramic t. | [kWh/t] 2477 |
[kWh/t] 2327 |
[kWh/t] ca. 2050 (’94) |
Energy: 25% cf. ’87 20% cf. ’90 CO2: 30% cf. ’87 25% cf. ‘90 |
||
6 | Glass | 67 | 14.9 | 1970-87: 47% sp. En. Con. 1970-87: 57% sp. CO2 con. |
14% sp. En. (94, ’87) 16% sp. CO2 (94, ’87) |
En (sp.) 22% (’87) CO2 (sp.) 25% (’87) |
||
7 | Potash | 34.4 | 10.9 | [tCO2/t crude salt] Old: 0.036 All: 0.094 |
[tCO2/t crude salt] Old: 0.033 All: 0.09 |
1987-94: 14% sp. CO2 red. old
Länder; 79% CO2 red. in new Länder (43% drop in capacity) |
[tCO2/t crude salt] Old: 0.029; (19% sp CO2 cf ‘87, 12% red. cf ‘90) 30% & 20% abs. red. All: 0.03 (68% sp CO2 cf ‘87, 66% red. cf ‘90) 83% & 78% abs. red. |
|
8 | Paper & Pulp Paper | 96.9 | 45.3 | 50% sp. en. red over last 25 years & 38% red. (‘75-’92) | ‘87-95 10%-12% sp. en ‘87-95: 11%-13% sp. CO2 |
Tot. sp. CO2 – 22% (‘90)
Sp. en. -20% (‘90) |
||
9 | Chemical Industry | 460 | 198 | Old: 1970-90: 37% sp. en. red. | 79 mt/a CO2 | 67.8 mt/a CO2 | >45 mt/a CO2 (‘94)
30TWh grid 45TWh tot. |
Sp. en. -30% (‘90) Tot: -30% (‘90) Tot: -40% (‘87) |
10 | Non-ferrous Metals | 52 | 64.2 | 1975-1992: 42% reduction in energy intensity | -20% sp. en. + CO2 (‘87-94) | Sp. en. sav 22% ‘1990-2005 | ||
11 | Steel | 675 | 78.5 | 1960-’93 45% sp. en. red. (2.62 tCO2/t crude steel to 1.44tCO2/tc) | Sp. en. 2,230 kg CO2/tWs: (100) |
Sp. en. 2,149 kg CO2/tWs: (96.3) |
Sp. en. 1,966kg CO2/tWs: (88.1) | unclear |
12 | Sugar | 36 1 | 3 1 | [kWh/100 kg beet] Old: 42 New: 142 |
[kWh/100kg] Old: 36 |
34 kWh/100 kg (‘94) | 29 kWh/100kg 27 kWh/100kg (2010) |
|
13 | Textiles | 55.2 1 | 19.4 1 | 613 GJ/net prod. | 60 GJ/net prod. | Old: sp. en. -15.8% ‘87-94 sp. CO2. -17.7% ‘87-94 |
490 GJ/net prod. (2005) (est.) 502 GJ/net prod. (2000) (est.) |
|
14 | Petroleum industry | 1970 40 lts/m2 of one/two family house | 26 litres/m2 | -25% ‘90-2005 sp. heating oil consumption | ||||
15 | Gas & Water | 0.31 kgCO2/kWh useful heat | All: 0.23 kgCO2/kWh useful
heat Old: -25% (‘90) New: -60% (‘90) All: -40% (‘90) |
|||||
16 | Electricity generation | 339 mt CO2 | 289 mt CO2 | 270 mt CO2 25% red. ‘87 to 2015 12% red. ‘90 to 2015 |
||||
17 | Ind. Energy & Power Users | |||||||
18 | Local Utilities | Sp. CO2 red. 25%
(‘90-2005) 34% absolute red. |
||||||
19 | BDI |
Source: EA (1996), Updated and Extended Declaration by German Industry and Trade on Global Warming Prevention, BDI, Cologne, Germany
* unless stated otherwise in the text
1 including Eastern Germany
3.3.5.1 Ministry Perspective
The main barriers to the acceptability of the climate change EA were:
In addition to these barriers to the EA, both the 1995 EA and the 1996 EA have been subject to a series of criticisms by serious research institutes such as the ZEW, ifo, Wuppertal institute and RWI. These are discussed in Section 3.6.
3.3.5.2 BDI Perspective
The main barrier to the commitment of the companies was the level of trust in the government: some associations feared that opting for an EA would result in having an EA plus a carbon/energy tax, rather than an EA instead of a carbon/energy tax. This lack of trust was overcome by those promoting the EA alternative.
The EA coverage of companies and turnover is presented in Table 3.3. In most cases, the associations represented a majority of the companies. This implies that there was little potential for industry-specific free-riders outside of the particular association. There remains potential for free-riders only from non-signatory sectors, and from companies within signatory associations who do not contribute their ‘fair share’ to reducing CO2 emissions.
There are no explicit measures in the EA to address the problem of free-riders. The view is that public pressure and environmental awareness is such that most companies will take part in the agreement. To be seen not to embrace this initiative is regarded, by all the expert interviewees, as having negative effects on the company and this is a real incentive for companies to show that they are making CO2 improvements.
A potential measure to address free-riders, is to implement the carbon/energy tax – but at a reduced or even zero-rated level for all signatories and at a higher level for non-signatories of the EA. If there is an EU-wide carbon/energy tax, then the German government will ensure that only the EA member companies are exempt. This should ensure that free-riders are not rewarded. It also demonstrates a possible complementarity between EAs and environmental taxation. This combination of different environmental policy instruments should be explored further.
1995 EA: The initial target was up to a 20% reduction in specific CO2 emissions by 2005, with reference to 1987. Only one association (the VCI) offered total targets (energy consumption and CO2). Other associations offered only specific reduction targets.
The overall target was decided by the BDI plus the partner associations – the BDI cannot dictate to the member associations and the associations cannot dictate to their members. The choice of target reflects an understanding of the level of reductions possible. The target is not far from the government intentions to reduce absolute emissions by 25% by 2005.
1996 EA: The overall target is for a reduction of 20% of specific CO2 emissions or specific energy consumption by 2005, with respect to emissions in 1990. This total target is an estimate of the achievable target for all the associations who are party to the agreement. There are no individual targets set for companies. Target levels were set by the Industry Associations, and there appears to have been little negotiation to tighten the targets or to agree some scheme for target-sharing. Table 3.4 gives the targets set by each of the associations under the 1996 EA. Twelve of the associations have since adopted total re-duction targets in response to public criticism.
3.5.1.1 Overview
There is no explicit set of company level measures that are to be embraced. At the association level, the range of measures/ initiatives to be taken vary considerably depending on the association and the sector. Sections 3.5.1.3 and 3.5.1.4 show the measures for two of the key sectors. For further measures see BDI (1996).
3.5.1.2 Government Perspective
Government says that it does not want a business-as-usual approach. It wants a ‘No-Regrets Plus’ approach. It is important that there is some actual additional effort as a quid pro quo for the benefits to industry from the delay in the introduction of the carbon/energy tax and the waste heat ordinance.
To ensure that the EA is taken seriously, the government emphasises that it is prepared to introduce significant regulatory measures if it believes that the EA is not being taken seriously by industry. Notably the government stated that it would not hesitate to ‘use regulatory and fiscal instruments’ if it emerged that the pledge given by the business community was complied with or amounted to little more than a ‘business-as-usual’ approach (BMU, 1995, in Rennings et al., 1996).
Examples of additional costs/initiatives include:
3.5.1.3 VDEW
As noted in the EA Document (BDI, 1996), about ten initiatives, aimed at ensuring that CO2 emissions reach the targets set, are underway. A number of these are measures that would have been implemented even without the EA, though the scope and impact of some of them have been extended by the EA. The measures include:
Specific EA initiatives:
3.5.1.4 VCI Initiatives
Special initiatives include:
There is no explicit target-sharing between associations or between companies within associations. The associations have each set targets that they feel can be reasonably met, and there appears to have been no negotiation of targets between associations, which would imply some type of target-sharing. Each association is bearing the cost of its own specific measures.
3.5.3.1 Overview
In the 1995 agreement there was no provision for monitoring. But following public criticism, monitoring initiatives were included in the revised 1996 EA. The explicit monitoring requirement in the 1996 agreement entails detailed reporting of CO2 emissions from the fossil-fuels used. This is to be carried out from calculations of fuel inputs to the power sector, based on data gathered from statistical offices, rather than by all 900 companies reporting their CO2 emissions separately. This reporting is annual and on a calendar basis. Furthermore, it will be verified by an independent external expert from the RWI, a recognised institute.
Every company with more than 20 people has to report its energy use to the Statistisches Bundesamt and the Statistisches Landesamt – in addition to reporting basic economic data. The data collected and analysed at the Landesamt will be used as a basis for the calculation of CO2 emissions (This differs from the Dutch model where there is a bottom-up questionnaire). This calculation will be carried out by the BDI, and verified by independent agents, the RWI. The monitoring report will be available to the public.
3.5.3.2 Limitations to Monitoring Possibilities
There are three main limitations to the possible monitoring of the CO2 results:
3.5.3.3 Future Developments
While the current monitoring system is a big improvement on the complete lack of monitoring in the 1995 EA, there are still some concerns that it is not sufficiently transparent.
Consequently, in Cologne in November 1996, a workshop was held to try to formulate an improved monitoring system and it was decided to have a year by year report, which will help show whether the associations were in line with their targets and which could, in prin-ciple, lead to new targets and new initiatives.
As the Climate Change EA was signed only in 1995 and 1996, and the first monitoring report will not be available until autumn 1997, there are currently few data available on the level of energy efficiency gains and CO2 reductions for the EA signatories.
There are, however, data for part of the target period and for previous years. These can be used to determine whether it is likely that the targets will be reached, and indeed how tough the targets are (see next section). However, the data clearly offer no indication of the EA’s effect on energy efficiency and CO2 emissions. Improvements to date are given in Table 3.5 (Section 3.7).
3.6.2.1 To Companies
To date, no licensing benefits have accrued from participation in an EA.
3.6.2.2 To Government
The EA is regarded as being faster than the law making process and as increasing the level of dialogue between government and industry. It will probably develop its own momentum as a result of the clear economic benefits of implementing ‘no-regrets’ strategies: the development of new markets, and the potential value of an image of green corporate responsibility.
Apart from those listed above, there are likely to be the following additional benefits:
The EA is not, however, expected to offer real encouragement to the uptake of EMAS; German companies have for many years been carrying out environmental audits and implementing environmental monitoring and management systems. Part of this reflects their existing requirement to submit information on SO2, NOx and dust/particulate emissions to the local municipality. Some also voluntarily submit CO2 emissions data.
In addition to the barriers mentioned in Section 3, the EA, especially in its 1995 version, has come under severe criticism.
Key Criticisms of the 1995 EA Have Included:
Criticism of EAs in General:
3.7.1.1 The Reference Situation
Data exists for a number of possible reference points: the base years used for the targets set under the EA (1987 and 1990), and the initial year of signature (1995). However, the data are variable in quality and coverage and this demonstrates the need for clearer reporting in the EA, including the 1996 declaration of several associations.
3.7.1.2 The Targets
As noted in Section 3.4, Table 3.3, the EA targets for associations are presented against a base year of either 1987 or 1990. Many of the associations are already some way towards the 2005 targets, and it is generally accepted by the parties that the targets will be reached. This tends to reflect:
This can be seen in Table 3.4, which shows the improvements (in specific terms) over time. In the case of the glass, cement and ceramic associations, improvements in energy efficiency before the EA was signed, but within the target timescales, represent more than half of the total target over the whole time period for the EA.
The latter point (that of easily achievable goals) reflects the fact that the targets were often set with the express intention of being easily achievable (source: interview discussions) given the measures adopted by the companies. It also reflects the fact (mentioned above) that the real targets for the EAs are lower then a first appraisal would suggest, given past progress, and indeed are very much in line with historical trends in energy efficiency improvements and CO2 reductions (see next subsection).
In addition, the qualitative assessment of environmental effectiveness, based on the structure of the agreement and interviews with key actors, suggests that the current EA formula is unlikely to produce actions extending much, if at all, beyond a ‘no regrets’ stage. The main results have been publications and workshops for information dissemination and transfer of know-how. It would, therefore, be generous to conclude that the EA will be a vital factor in meeting the targets.
However, the EA is a flexible on-going process, which allows for revisions and improvements. The environmental effectiveness of the agreement can be ensured by maintaining the momentum established and by creating incentives for greater emissions reductions. This could include establishing tighter and staged targets and company-specific commitments. Indeed, there are already some discussions on tightening the targets on the basis of existing progress.
Table 3.4: Improvements Over Time in Energy Efficiency and CO2 Reductions
>Target**
Sector |
Period |
Specific reduction over period |
Average annual reduction |
Target |
|||
---|---|---|---|---|---|---|---|
years |
CO2 |
energy |
CO2 |
energy |
by 2005 |
||
1 | Cement | 1987-1994 |
15% |
2.2% |
En: 20% (A) ‘87 |
||
2 | Bricks | 1975-1990 |
25% |
40% |
1.9% |
3.3% |
CO2: 15% (O) ‘90
70% (N) ‘90 |
4 | Refractory industry - old Länder |
1987-1995 |
8% |
1.0% |
|||
- new Länder | 1987-1995 |
51% |
8.5% |
||||
- old Länder | 1975-1995 |
15% |
0.8% |
CO2: 15%- 20% ‘87 |
|||
5 | Ceramic tiles | 1987-1994 |
17% |
2.6% |
En: 25% (A) ‘87 |
||
1990-1994 |
12% |
3.1% |
En: 20% (A) ‘90 |
||||
6 | Glass | 1970-1987 |
57% |
47% |
4.8% |
3.7% |
CO2: 25% (A) ‘87 |
Glass | 1987-1994 |
16% |
14% |
2.5% |
2.1% |
En: 20% (A) ‘87 |
|
8 | Paper & Pulp Paper | 1970-1995 |
50% |
2.7% |
CO2: 22% (A) ‘90 |
||
1975-1992 |
38% |
2.8% |
En: 20% (A) ‘90 |
||||
1987-1995 |
11% |
1.6% |
1.4% |
||||
9 | Chemical Industry | 1970-1990 |
37% |
2.3% |
En: 30% (A) ‘90 |
||
10 | Non-ferrous metals | 1975-1992 |
42% |
3.2% |
En: 22% (A) ‘90 |
||
11 | Steel | 1960-1993 |
45% |
1.8% |
|||
1975-1992 |
28% |
1.9% |
|||||
1987-1995 |
12% |
1.6% |
|||||
1990-1995 |
9% |
1.8% |
|||||
13 | Textiles - old Länder | 1987-1994 |
18% |
16% |
2.7% |
2.4% |
Sources: EA (1996), E. Jochem & W. Eichhammer (1996)
* Only some sectors shown – where information detailed in their EA Declaration
** O: Old Länder; N: New Länder; A: All Länder
3.7.1.3 The Baseline
In addition to comparing environmental performance against the reference points 1987, 1990 and, indeed, 1995, the environmental performance of the Climate Change EA should be assessed against a baseline which takes account of the energy efficiency improvements that German industry would make independent of the EA (reflecting the continuing incentives to save energy and cut costs, technological improvements and new investments to replace capital stock). Furthermore, the performance of the EA should be assessed against alternative policy scenarios e.g. a carbon/energy tax and the waste heat ordinance.
Business as Usual
Table 3.4 shows the improvements over time in energy efficiency and CO2 emissions for specific sectors which are party to the EA and presents estimates of the annual energy efficiency improvements and the annual CO2 emissions reductions where these are available.
It would be tempting to assume that, in the absence of the EA, this trend would continue into the future, as this would offer a useful baseline against which to judge the severity of the targets and the real effectiveness of the EA. However, there are strong arguments against following this assumption. It is not statistically tenable to maintain that past improvement rates are an indication of future improvement, both because of structural changes in the industry and because recent investments might signify that future efficiency gains will be smaller (or vice versa).
Alternative Policies
A further way to assess the effectiveness of the EA instrument is to compare it to other alternative instruments, such as the carbon/energy tax or the waste heat ordinance. A priori, it is clear that a carbon/energy tax would exert a greater incentive effect than the EA, as would the waste heat ordinance. The environmental effectiveness of these instruments is expected to be greater.
Regarding cost, the cost of the alternative carbon tax instrument would depend on how the tax is levied and on what is done with revenues from it. This is especially important as the appropriate use of the revenues or parallel reductions in other taxes (to ensure fiscal neutrality) could avoid potential competitive impacts and unwanted distribution effects. The cost of the other alternative instrument – the waste heat ordinance – is difficult to assess, though industry associations maintain that it would impose real costs through the inflexibility of its requirements. In each of these cases, the alternative instrument is likely to have some real effect on CO2, while the cost is not clear.
3.7.1.4 Environmental Effectiveness
Assessment Against the Baseline
It is too early to assess the environmental effectiveness of the EA. Monitoring data on progress since the agreement was signed are not yet available (the first monitoring report is expected Autumn 1997). A 1996 RWI/IFO study states that Germany is unlikely to meet its CO2 emission reduction targets, even with the current revised EA. The results, the methods applied and the scenarios outlined have also met with criticism (Wuppertal Institute 1997). Although the EA does not cover all sectors affected by the obligations, and is, therefore, not responsible for the total target, it is clear that an increased effort under the EA would be very helpful in ensuring that Germany meets its commitments under the FCCC. The transport sector is the key to the achievement of these total targets and including transport associations would clearly strengthen the EA.
Compared With Other Environmental Policy Instruments
However, for the EA under its current (1996) formulation, the ‘additional efforts’ are not expected to be great so the effect of the instrument is not expected to be significant. The EA cannot, therefore, be regarded as an efficient instrument and, if it is not efficient, it can hardly be regarded as cost-effective even if the cost of implementing it may be relatively low. However, these are a priori comments: real assessment will have to be based on an examination of the results when regular monitoring data becomes available and on any further revisions of the EA.
Cost-Effectiveness
The EA represents some extra costs, notably for monitoring and reporting, communication and specific initiatives. It has not, however, been possible to obtain data on costs and, thus, a comparison with the costs the companies would have borne, had the waste heat ordinance or a carbon/energy tax been implemented, is not possible. In any case, the costs of these alternative instruments would depend on their design and implementation (for example, the mechanism for levying the tax, the use of revenues, flexibility in the implementation of the Ordinance etc.). It also appears that the costs incurred under the EA to date are only slightly higher than the expenditure on improving energy efficiency purely for cost-saving reasons.
As noted earlier in this case study, this EA should be seen as a process and will continue to develop in the light of progress to targets and public comment on it. The following box identifies a number of areas in which the EA could be improved.
In addition to issues of how to improve the EA, there are also measures in which the EA document produced by the associations could be further developed. New revisions could valuably include the following information:
CEFIC has suggested an EU-wide EA. CEFIC’s members are the chemical industry associations from 15 European states, including some from Eastern Europe. CEFIC put forward the initial EA proposal in 1990 and updated it in 1992.
Current recommendations include moving the CEFIC model to UNICE. This would provide a further EU umbrella model. It is much more important to have an EU wide agreement than a national one, given concerns over competition effects.
The ICCA (International Council of Chemicals Associations), which covers associations from the EU, USA, Japan, Canada, Australia, Taiwan and Korea, has also discussed (1 Nov. 1996) the possibility of developing an international EA. Similarly, the Clinton administration appears interested in EAs as a new instrument: the USA were positive about the model as demonstrated by Wittmeier.
The EA includes, also, a commitment that subsidiaries abroad will act in the the same way as parent domestic companies – e.g. Hoechst , which has a multitude of subsidiary companies abroad.
The following series of points summarises the key conclusions of the German Climate Change EA.
3.9.1.1 Environmental Effect
Box 3.1: Possible Ideas for Improving the
EA
|
3.9.1.2 Value of Negotiation/Pro-Active Attitude
3.9.1.3 Cost-Effectiveness/Tailor-Made EA?
3.9.1.4 Quicker, Smoother Achievement of Objectives?
3.9.1.5 Issues/Transferability
3.9.2.1 Prior Consultation
3.9.2.2 Binding (Sanctions/Free-Riders)
3.9.2.3 Quantified Staged Objectives
3.9.2.4 Monitoring of Results
3.9.2.5 Publication of Agreements, Results
3.9.3.1 Relative Merits of EAs Compared to Other Instruments
3.9.3.2 Sector Coverage – Ref. to Objective
The level of sector coverage is increasing and the aim is to continue to include other sectors.
3.9.3.3 Added Value – Ref. to BAU – Role and Ref. to Regulation
3.9.3.4 Relationship to Competition, Internal Market, Trade
Interviewees and Key Research Institutes Active in EAs
Interviewees | Other Key Contact Addresses |
---|---|
Dr Franz Josef Schafhausen Dr Kilian Delbrück Bundesministerium fur Umwelt, Naturschutz u.
Reaktorsicherheit Tel: +49 22 83 05 24 51 |
IFO Institut für Wirtschaftsforschung Postfach 86 04 60 D-81631 München, Germany Tel: +49 89 92 24 0 |
ZEW: Zentrum für Europäische
Wirtschaftsforschung (ZEW) Postfach 103443 D-68034 Mannheim, Germany Tel: +49 621 1235 210 |
Dr Wittmeier Dr Gunter Thomas VCI: Verband der Chemischen Industrie e.V. Tel: +49 69 25 56 14 63 |
Dr Joachim Hein
Bundesverband der Deutschen Industrie (BDI) Tel: +49 22 13 70 85 55 |
Bundesministerium fur Wirtschaft
(BMWi) Referat III A 4 Villemombler Str. 76 D-53123 Bonn, Germany Tel: +49-228-615-0/-3449 |
RWI: Rheinisch-Westfälisches Institut für
Wirtschaftsforschung Hohenzollernstr 1/3 D-45128 Essen, Germany Tel: +49 201 8149 – 0 |
Dr Stephan Singer
WWF – Germany Tel: +49 69 60 50 03 77 |
Dipl Ing Manfred Hildebrand Dr Ing Thomas Hoffmann VDEW – Vereinigung der Deutscher Elektrizitätswerke e.V. Stresemanallee 23 Tel: Sw +49 69 63041 |
Kai Schlegelmilch Stefan Ramesohl Dr Kora Kristof Wuppertal Institut für Klima, Umwelt, Energie
GmbH Tel: +49 202 2492 152/-183 |
BDI (1995): Declaration by German Industry and Trade on Global Warming Prevention, BDI, Cologne, Germany March, 1995.
BDI (1996a): Updated and Extended Declaration by German Industry and Trade on Global Warming Prevention: 27 March, 1996, BDI, Cologne, Germany.
BDI (1996b): CO2 monitoring. Concept for Regular Reporting to provide Transparent and Intelligible Verification of the Declaration by German Industry and Trade on Global Warming Prevention, BDI, Cologne, Germany, February 26 1996.
BDI (1996c): Freiwillige Vereinbarungen und Selbstverplichtungen der Industrie im Bereich des Umweltschutzes, BDI, Cologne, April 1996.
BMU (1995): Staatssekretär Jauck fordert mehr Kooperation vom Staat und Wirtschaft im Umweltschtz, BMU-Pressemitteilung 117/95 Bundesministerium fur Umwelt, Naturschutz u. Reaktorsicherheit, Bonn, Germany.
BMWi et al (1996a): Effizienzsteigerung bei der Nutzung von Energie und Rohstoffen, Gemeinsames Positionspapier, Bundesministerium für Wirtschaft, IG Chemie-Papier-Keramik, Verband der Chemischen Industrie.
BMWi et al (1996b): Pressemitteillung: RWI/ifo Studie’ Gesamtwirtschaftliche Beurteilung von CO2 Minderungstrategien, Bundesministerium für Wirtschaft, 21.11.1996.
CEFIC (1996): VEEP (2005): Position Paper, June 1996.
Hoffman T (1995): Das CO2 Minderungspotential in der Deutschen Elekrizitätswirtschaft, Spektrum EP 9/95, Luftreinhaltung EP, 10/95.
Hoffman T. & M. Hildebrand (1996): Involvement of the German electricity suppliers in climatic protection. in StromDISKUSSION, IZIE, Frankfurt, Germany.
Jochem E. & W. Eichhammer (1996): Voluntary Agreements on CO2-emissions Reduction of Seven Associations of the German Economy, Workshop on Voluntary Approaches in the Field of the Environment, Paris, June 17 1996.
Rennings K, K.L. Brockmann, H. Bergmann (1996b): Voluntary Agreements in Environmental Protection: No Free-Market Instrument, ZEW, Mannheim, Germany (English summary of ZEW 1996).
VCI (1996): Self Commitment for the Energy Sector by the German Chemical Industry (VCI), VCI, Frankfurt, Germany, February 21, 1996.
Vorholz, F (1996): Papier mit Sprengkraft, Die Zeit, 22.11.1996.
Wuppertal Institut (1995): Erklärung der deutschen Wirtschaft zur Klimavorsorge: Königsweg oder Mogelpackung?, Wuppertal Paper No. 39, Wuppertal July.
Wuppertal Institut (1997): Aktualisierte Erklärung der deutschen Wirtschaft zur Klimavorsorge: Große Worte, keine Taten?, Wuppertal Paper No. 71, Wuppertal March.
ZEW (1996): Möglichkeiten und Grenzen von freiwilligen Umweltschutzmassnahmen der Wirtschaft unter ordnungspolitischen Aspekten, Endbericht, ZEW, Mannheim, Germany.
*: The case study was revised by Kai Schlegelmilch/Stefan Ramesohl (Wuppertal Institute for Climate, Environment and Energy, Wuppertal)
For references, please go to https://www.eea.europa.eu/publications/92-9167-052-9-sum/page006.html or scan the QR code.
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