What is carbon leakage in plain language

Paris Agreement

At the UN climate conference in Paris (France) in December 2015, 197 countries agreed on a new, global climate protection agreement. The agreement came into force on November 4, 2016 after it was ratified by 55 countries that emit at least 55 percent of global greenhouse gases. 180 countries have now ratified the agreement (as of September 2018), including the European Union (EU) and Germany (ratification on October 5, 2016).

The Paris Agreement forms an ambitious climate regime with universal validity and obligations under international law for all states. Many more detailed regulations are to be worked out and adopted by the 24th UN Climate Change Conference, which will take place in Katowice (Poland) in December 2018. For example, on the question of how the various national climate protection efforts can be made transparent and checked.

The previously rigid division into industrialized countries on the one hand and emerging and developing countries on the other was broken for the first time in a multilateral climate agreement. The agreement emphasizes the common but different responsibilities.

The Paris Agreement has three objectives:

  • The states set themselves the global goal of limiting global warming to "well below" two degrees Celsius compared to the pre-industrial age, with efforts to keep it down to 1.5 degrees Celsius.
  • The ability to adapt to climate change is to be strengthened and, in addition to reducing greenhouse gas emissions, is established as an equally legitimate goal.
  • In addition, the flow of funds is to be brought into line with the climate targets.

The global peak in greenhouse gas emissions should be reached as soon as possible. In the second half of the century, a balance should be achieved between greenhouse gas emissions and their reduction through sinks (greenhouse gas neutrality).

In order to achieve the goals, the states themselves determine their nationally determined contributions. To ensure that the goals are met, a global inventory will be carried out every five years, starting in 2018. The national climate protection contributions must be updated and increased every five years from 2025 ("ambition mechanism"). In addition, all states are called upon to present long-term strategies for low-greenhouse gas development by 2020.

Developing countries are supported in mitigation and adaptation by the industrialized countries through technology development and transfer, through capacity building and financial aid. The existing technology mechanism is intended to accelerate international cooperation to reduce greenhouse gas emissions and adapt to climate change. The national contact points (National Designated Entities) set up within the framework of the technology mechanism form one of the foundations for this. The technology mechanism is confirmed in Article 10 of the Paris Agreement and is to be further developed.

The German contact point is anchored in the Federal Ministry for Economic Affairs and Energy. Since June 20, 2016, the tasks of the German contact point have been carried out by an office in close coordination with the Federal Ministry for Economic Affairs and Energy.

The commitment made at the World Climate Conference in Copenhagen in 2009 to provide US $ 100 billion a year for climate finance from 2020 onwards will be continued until 2025. For the time after that, a new target is to be set and the donor group to be expanded.

Climate protection goals: important orientation for industry

The Paris Agreement and the ambitious long-term goal also provide important guidance for German industry. A long-term, reliable, transparent and comprehensible design of climate policy is a prerequisite for future successful economic activity.

At the same time, thanks to its comprehensive analyzes and the global network that encompasses most of the countries, the technology mechanism improves the opportunities for companies to bring their products for greenhouse gas reduction and adaptation to climate change into international cooperation.

There are still many concrete decisions to be taken to implement it. In all measures resulting from the implementation of the Paris Agreement, the economy should, if possible, not incur any additional bureaucratic or financial burdens and a "level playing field" should continue to be maintained in the international context.

Greenhouse gas reductions in Germany in contrast to the global increase in greenhouse gas emissions

In Germany, industry is making great efforts to reduce CO2 emissions. In the period 1990-2015, Germany reduced its CO2 emissions by a total of 22.4 percent; however, worldwide these have increased by around 57.5 percent in the same period.

Against this background, in addition to national climate protection policy, it is particularly important to strive for global solutions that include the most important industrialized and emerging countries. (Infographic PDF: 286 KB).

Otherwise, greenhouse gas emissions may be exported and jobs may be relocated from the pioneering countries to countries with less ambitious climate protection efforts (carbon leakage [1]). The climate policy instruments currently in use must therefore be provided with appropriate precautions to prevent this from happening.

The Federal Ministry for Economic Affairs and Energy takes the risk of relocating production to countries with less stringent environmental regulations seriously. Focusing only on national or regional climate protection goals - without taking international repercussions into account - does not serve global climate protection.

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[1] Carbon leakage: Literally: "Carbon leakage". The catchphrase describes the risk that, due to excessively strict EU regulations in emissions trading, companies relocate their locations outside of the EU to countries without comparable climate protection standards. However, there is a threat not only of relocating CO2 sources - with industry, jobs are also being relocated.