‘Companies are much more ambitious than our governments’ – Trends magazines on PC

Europe wants to be climate neutral by 2050. But we do not question the current policy, which focuses on incentives and subsidies, says economist Johan Albrecht. In his new book, he makes recommendations to secure our climate future. “Governments should introduce a net-zero policy for themselves.”

“About 90 multinational companies are responsible for two thirds of the emissions from the energy sector and industry,” says Professor Johan Albrecht (UGent). “However, climate policy is only interested in greenhouse gas emissions within national borders. What really matters is the decarbonisation of the entire production and supply chain, regardless of the country in which the emissions are produced. Fortunately, the number of large companies with ambitious net-zero agenda “They are no longer waiting for the government, but setting goals for themselves.”

“About 90 multinational companies are responsible for two thirds of the emissions from the energy sector and industry,” says Professor Johan Albrecht (UGent). “However, climate policy is only interested in greenhouse gas emissions within national borders. What really matters is the decarbonisation of the entire production and supply chain, regardless of the country in which the emissions are produced. Fortunately, the number of large companies with ambitious net-zero agenda “They are no longer waiting for the government, but setting goals for themselves.” The Economist published a new book: Climate Neutral in 2050? The key question is why the complex European climate policy, which is to enforce climate neutrality by 2050, is still not leading to a sharp drop in CO2 emissions after a few decades. The European Union has set impressive ambitions. Why do you doubt the effectiveness of policies to achieve them? JOHN ALBRECHT. “Energy-related CO2 emissions fell by about 30 percent between 1990 and 2019. This decline is primarily due to lower use of coal in the energy sector and industry. But since 2014, European emissions have fallen by only 1.1 percent. The International Energy Agency has since 2015 pointed out that the decline in emissions in Western countries has stopped, but the limited effect of the policy is not called into question. ” Why is the policy so ineffective? ALBRECHT. “The focus is mainly on correcting market forces through the classic combination of punishment and reward. Since 2005, emissions trading has put a price on every tonne of CO2 emitted, and the use of fossil energy is heavily taxed. In addition, governments share generous subsidies. . and tax benefits to encourage citizens to change their behavior, but that policy remains non-binding because only part of the population can invest in an expensive renovation project or an electric car. “There is no guarantee that the use of fossil energy will reduce. You can drive electrically, but you can just as well buy a pick-up that consumes 18 liters per. 100 kilometers. Focus on a CO2 price and high fossil fuel prices presuppose that our economic decisions are mainly driven by price. Of course, if a carbon-intensive product becomes more expensive, demand will fall and emissions will fall. The market then solves the climate problem. Only politics forgets that there is no guarantee whatsoever that the CO2 price will be passed on to the final consumer. “” We do not live in a market economy, but in an organizational economy “, wrote the economist Herbert Simon. You pay a big attention to the Nobel laureate in your book ALBRECHT “If the price of CO2 rises today, the production of cornflakes will be more expensive, but that does not mean that retailers will increase the price of cornflakes on their shelves tomorrow. They have long-term framework agreements with the major food companies and strive for stability. It is therefore very possible that cornflakes will be cheaper, despite the higher CO2 price. In an organizational economy, on the other hand, it is not the anonymous market forces that determine prices among themselves, but large organizations. Simon also emphasizes that a market economy works really well under stable and predictable conditions. In extreme uncertainty, as in wartime, the market stalls because no one dares to invest anymore and governments create a planned economy to deal with the uncertainty. Europe’s climate ambition today is also creating uncertainty. Look at the Russian invasion of Ukraine. According to the RePowerEU plan, we must speed up the elimination of Russian fossil fuels. It is not obvious and has an impact on prices. Climate neutrality requires a fossil divestiture, but in the meantime we expect the gas network to be perfectly maintained to meet the declining demand for gas by 2050. A successful transition to climate neutrality is largely dependent on a clear direction that is lacking. ” organizations matter in their own hands? ALBRECHT. “More and more companies are setting their own climate agenda. It is important that these companies not only look at cross-border emissions, but also take into account emissions across their entire value chain. A real climate solution is not possible as long as the global supply chain is not decarbonized. Companies like Nike, IKEA and Pfizer want to make their entire chain climate neutral in the long run. Organizations with a net-zero agenda are more ambitious than our governments. “You also talk about the Tesla effect in your book. ALBRECHT.” Tesla is a unique game changer. Each manufacturer must present an electrical quote today. Volvo announced that they will only bring electric cars to market in 2030. Honda will be CO2-neutral by 2050. All the electric ambitions are a surprise, because today in Europe there is a technical regulation for manufacturers that ensures the future of the internal combustion engine. today, new cars must emit 95 grams of CO2 per. kilometer. This regulation has been overtaken by the ambitious corporate goals. “What should the policy prioritize? ALBRECHT.” In addition to a necessary evaluation of current policies, governments should introduce a net-zero policy for themselves. I also believe that governments can support the generalization of the net-zero movement, for example with databases. Eg. relevant information regarding. an ecological footprint of a value chain can be quickly exchanged with SMEs without even having to go through an expensive net-zero exercise. “Do you really believe in a climate-neutral Europe in 2050? ALBRECHT.” Nobody knows. But we must be able to face the future generation. It requires a policy that is less non-binding. This is only possible if private and public organizations really work together. “Meanwhile, we have seen that our society is not ready for high fossil energy prices. A large part of the population is complaining about it, which means that priority is given to reducing the fossil energy bill. Many are now questioning the expensive demands for new construction. “The renovation obligation from 2023 and the promotion of electric cars. Climate neutrality is crucial, but the transformation path towards climate neutrality must be inclusive. If not, a strong polarization threatens.”

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