16 March 2021
Herr Bundesaußenminister, lieber Heiko,
Herr Bundeswirtschaftsminister, lieber Peter,
Ladies and Gentlemen,
Speaking about, as you said, the future of industry: just look north, for example to Sweden. There, 160 kilometres below the Arctic Circle, one can visit a pioneer of greening our economy. In the town of Lulea, a steel plant just started using hydrogen gas to reduce iron ore. And some days ago another producer in the same region announced that he will build a large-scale green hydrogen plant as part of a new steel production facility.
These are not isolated cases. We all know that today, the steel industry is responsible for up to 9% of global emissions. Thus, companies in Northern Sweden have to and want to bring down their carbon footprint to zero – with water vapour the only by-product. Their way to achieve this is clean hydrogen. Hydrogen, derived from renewable energy, such as hydroelectric power. A resource that is as abundant in Scandinavia as high-quality iron ore.
These Swedish entrepreneurs match exactly the spirit of our European Green Deal. We want to reconcile the way we produce and do business with the health of our planet. It is time to do this. Because what is good for the planet is good for business and good for us all. The energy transition is at the heart of our European Green Deal. And this is why I am delighted to be able to talk to you today at the Berlin Energy Transition Dialogue. Sadly, because of the pandemic, only virtually.
Let me be clear: The European Green Deal is as important today as it has been before COVID-19. If anything, it has become even more important. There is increasing evidence that the loss of biodiversity is one of the root causes for this global pandemic. And while much of the world’s activity froze during lockdowns and shutdowns, our planet continued to get hotter. We see it all around us: From the collapse of the glacier in Northern India, which just recently killed dozens of people, to the many, many crops destroyed in many European countries by the severe droughts of the last years – climate change is the massive crisis beyond COVID-19. Therefore, after the pandemic, there can be no backsliding. No return to economic activity based on fossil fuels, at the expense of climate and nature.
A bit more than a year ago, Europe has said, indeed, that it wants to become the first climate-neutral continent by 2050. And last December, EU Leaders agreed to a greenhouse gas emission reduction target of at least 55% by 2030. The first ever European Climate Law will hopefully soon come into force. And all of this is part of our commitment to deliver on the Paris Agreement.
And this is something that the business community has asked us to do for many years: Clear, transparent and firm targets. So that companies have the certainty that they need to plan ahead for the future, to turn their investments into green investments. Because in our fight against climate change, business is our close and indispensable partner.
Our European Green Deal is our strategy for sustainable growth. Now it is also our roadmap out of the crisis. One third of the investments from our Recovery Plan, NextGenerationEU, will finance the goals set out in the European Green Deal. Together with the EU budget, we are investing EUR 1.8 trillion. This will bring massive investments, to build forward better – and more sustainable.
NextGenerationEU is an opportunity to boost our energy transition. Let me give you two examples: The first one: With NextGenerationEU, we want to start a European Renovation Wave. The main objective is to make our buildings more energy efficient. Buildings notably account today for 40% of our emissions. So by refurbishing and refitting them, we can improve their energy performance. We cut emissions and at the same time, we reduce our energy bills. And in addition, our Renovation Wave brings a much-needed boost to our construction sector, and new jobs to our communities.
Second, with NextGenerationEU, we will invest in clean hydrogen as never before. Clean hydrogen is a perfect means towards our goal of climate neutrality. I just gave you the examples from Northern Sweden. But also in Germany and other countries, numerous regions can benefit from hydrogen – just think of the so-called Ruhr-Gebiet. Clean hydrogen can power heavy industries, propel our cars, or trucks and planes, store seasonal energy and heat up our homes. And all of this with almost zero emissions.
For the steel industry, hydrogen is the opportunity on their way to more sustainability. Steel is everywhere, we know it – in cars, ships, bridges, buildings, washing machines – you name it. We need steel. But we want it to be sustainable. Clean hydrogen is the way to go.
To help with this transition, last year we came up with a roadmap towards a hydrogen ecosystem in Europe. Like with our European Green Deal, we set clear targets: We want to have an annual production capacity for renewable hydrogen of one million tons by 2024 and ten million tons by 2030. And by 2050, we want renewable hydrogen technologies to be deployed at large scale to reach all hard-to-decarbonise sectors in our economy. These are ambitious goals, but they are realistic too.
To get there, we have to start now. To reduce greenhouse gas emissions by at least 55% towards the end of the decade, we have to act today. Because 2030 is just around the corner. This is why, by this summer, we will revise our entire climate and energy legislation to make it ‘fit for 55′.
Let me give you a short preview of what we will be proposing: First, we will enhance the EU Emissions Trading System. We will extend it to the maritime sector. And we will better apply it to aviation. We are also looking into introducing emission trading for buildings and for road transport. Carbon must have its price – because nature cannot pay the price anymore.
Second, we will come forward with proposals to boost renewable energy and improve energy efficiency. For example, we will propose measures to increase the energy efficiency of appliances – from vacuum cleaners to smartphones, you name it. We will also invest in electric charging infrastructure and battery technology to help the car industry on its way towards electricity – that is the future. Clearly, this is also what consumers want: The sales of electric cars doubled last year, reaching almost 10% of car sales in Europe. And there is more to come.
Finally, we want to take green financing to the next level. Because to achieve our 2030 goal, we need to boost green investment. We know that we will have to invest around EUR 350 billion more per year in the energy system in the coming decade to make it sustainable. Our European Union green bond standard, for example, and the EU taxonomy will lead the way. It will bring much needed clarity on what accounts for sustainable, eco-friendly activities. Because we know how important this is for investors, who are looking for truly sustainable projects – they do not want greenwashing, they want truly sustainable projects. Again, our targets are ambitious, but we can reach them.
And we need others to match our ambition. And they do. From South Korea to Japan, from South Africa to China. Of course, we want to make sure that they live up to their commitments – so not only on paper, but on the ground. And we stand ready to help our partners on their way forward. And I must say, we are really excited that President Biden re-joined the Paris Agreement on his very first day in office. I also commend Joe Biden for his plan to convey a Leaders’ Summit for Earth Day. Because now is the time for action.
Europe is world leader when it comes to innovation of clean technologies. We stand ready for global leadership on climate change with our partners. A shared commitment to a net-zero emissions pathway by 2050 would make climate neutrality a new global benchmark. That would be a powerful message in the run-up to the COP26, the next UN Climate Change Conference.
And finally, we also need a Paris-style agreement for biodiversity. Let us be very clear that for example when we lose forests, we do not ‘just’ lose green space or natural habitat. We lose a key ally in our fight against climate change. And this is why the European Union will soon present a legal framework for the restoration of healthy ecosystems. It is why we will protect at least 30% of land and sea in the European Union. And we are ready to broker the same ambition at global level, at the next UN Biodiversity Summit in Kunming. Because this will have to be like COP21 was for climate!
The path to carbon neutrality offers great opportunities for innovation, growth and sustainable jobs. European companies know this. They bet on the opportunities offered by clean technologies at an early stage. And their pioneering spirit is now paying off.
But let us make no mistake. If we want our companies to continue on their way to zero emissions, we must insist on fairness and a level playing field for them. Let me, for a last time, return to the example of steel, one of the most traded commodities internationally: We want European companies to heavily invest in expensive technologies to make steel green. Green steel costs around EUR 100 more per ton than traditionally carbon-heavy produced steel. So clearly, we have to prevent cheap products from abroad from undermining our efforts.
And this is why this year we will present a Carbon Border Adjustment Mechanism. With this mechanism, we will impose a CO2 charge on certain products entering the European Union. We work so hard to reduce our emissions. Thus, we cannot accept to import, at the same time, emissions from abroad. And the Carbon Border Adjustment Mechanism should motivate foreign producers, but also EU importers, to also reduce their carbon emissions. This would be our preferred solution.
Ladies and Gentlemen,
From hydrogen valleys to climate-friendly buildings, from green steel to zero emission cars – our European Green Deal will affect almost all aspects of our daily lives. It will make our lives better. Because, as we have seen, our European Green Deal involves much more than cutting emissions. It is about making systemic modernisation across our economy, society and industry. It is about building a better world to live in. Let us work on this together. You can count on me, and I know that I can count on you.
And thank you very much for the attention!
Source: Keynote speech by President von der Leyen at the Berlin Energy Transition Dialogue 2021