Opinion Why Merkel's Climate About-Face Is Bad for Business

The economy or the environment? That is the choice as Angela Merkel sees it -- and she has chosen the former. But the dichotomy is no longer valid, and Merkel's choice is a grave mistake. These days, one can have both the economy and the environment.

By Christian Schwägerl

Forget the polar bears. Ignore the ice melting in Greenland.

When French President Nicolas Sarkozy calls EU leaders together in Brussels on Thursday to debate the European climate package, Chancellor Angela Merkel should be thinking about German carmakers, German energy companies, and other industrial jobs in the country.

And then, to help them, she should push for strict climate protection targets.

German environmental activists hold an effigy of German Chancellor Angel Merkel dressed as superman. The posters say: 'Courage for Climate Protection!'

German environmental activists hold an effigy of German Chancellor Angel Merkel dressed as superman. The posters say: 'Courage for Climate Protection!'

Lately, many of her fellow Christian Democrats, as well as bosses in Germany's top companies, have been advising her to do the opposite. Their message is a simple one: Forget about climate protection, this is an economic crisis! Now is not the time to be spending time and money on the environment.

Such a position, though, is wrong on a number of counts. First, the climate crisis and the financial crisis have a lot to do with one another. Both are the consequences of a short-sighted, unsustainable economic system. They are the result of a crass exploitation of capital, whether it be monetary or ecological.

Second, the old rules of conflict, cultivated by both Greenpeace and the Federation of German Industry (BDI) -- according to which one had to choose between the environment and the economy -- lost their validity long ago. The growing scarcity of oil and clean water, both fuels which drive the global economy, means that the market of the future will have to be both energy efficient and less resource intensive. Already, a company like Siemens makes a quarter of its profits from green technologies. The key question is not: environment or economy? The question is who will dominate the environmental economy.

Third, climate protection is not strictly an environmental question. It is also a matter of national security. Without a radical departure from fossil fuels, we will not only face a significant increase in refugees and failed crops worldwide. There will also be much tougher competition among major economic players for scarce oil. Petro-dictatorships and even terrorists will be strengthened as a result.

In recent weeks, Merkel has done nothing to highlight the interconnectedness of the two crises. Instead, she went on the record on Monday saying she wouldn't agree to any EU climate protection package in that would endanger German jobs or investments. She has succumbed to the lobbying of a few energy-intensive industries. And she has been swayed by energy-company warnings of rising prices -- despite the fact that they long ago passed on the costs of the CO2 credits scheme to their customers, even though the credits have thus far been free.

Merkel's comments this week come across as a political capitulation. Naturally the economy has to change massively if the climate package is to have any affect. Of course measures to reduce CO2 emissions will cause job losses and prevent investment. It takes courage to say that in the middle of a recession. However, climate protection, if handled correctly, will create far more jobs than it destroys and will cause far more investment than it hinders. To say that in the middle of the recession could give people new strength.

A CO2 surcharge for steel, cement and coal-fired electricity can be withstood, if at the same time Germany makes a big contribution to the world economy with nanomaterials that bind carbon dioxide, biotechnologies that can help generate energy, and cars and machines that only need a fraction of their previous energy. Germany is a country that has many patents for green technologies and it will emerge as a winner from this and future economic crises. Strict and reliable CO2 targets are the best incentives for companies to go in this direction and to secure Germany a strategic advantage for the rest of the century.

Germany is, after all, the country with the greatest potential to profit from climate protection. Nowhere else on earth are there as many highly-qualified engineers with an extreme interest in environmental issues. Germany is a leader in auto-manufacturing, mechanical engineering, building power stations -- all those sectors in which there is the greatest potential for innovation and profit.

Strict climate protection regulations in the EU will bring multiple benefits: lower electricity bills; reduced reliance on energy imports; and a lever to persuade America and Asia to follow the example. And they give innovative companies, such as those in Germany, a head start in finding an intelligent way out of the global economic crisis. President-elect Barack Obama has already announced that he wants to make the US a global player when it comes to green technology.

If, on the other hand, Angela Merkel turns away from strict environmental targets in Brussels this week, then young Germans will have to pay a bill that is twice or three times as high. They will be have to pay for costly subsidies to out-moded industries, for the green jobs that are not created, and for the climate change that will wreak terrible damage.


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