‘Costly’ pricing plan
GERMANY’S blue-chip companies could face billions of euros in costs to cut carbon emissions under a climate protection plan due to be unveiled by the government on Friday, according to a study by asset manager Union Investment.
“According to our research, almost every one of the (30) DAX companies will be facing big challenges, even under low CO2 price scenarios,” said Henrik Pontzen, head of environmental, social and corporate governance at Frankfurt-based Union Investment’s portfolio management business.
Germany, which is responsible for just over 2 per cent of the world’s greenhouse gases emissions, mainly aims to cap carbon emissions from buildings and transport.
Its utility sector has already made substantial reductions, forced by mandatory carbon permit trading (EUETS) in Europe that incentivises carbon efficiency.
But the country is still on track to miss targets to cut greenhouse gases emissions, of which CO2 is the main one, by 55 per cent in 2030 from 1990 levels, having achieved less than 30 per cent so far.
Union Investment said that putting a carbon price on areas not captured by the ETS could cost the DAX group of companies 5.2 billion euros ($12.6b) a year, an estimate it based on a price of 30 euros ($F72.6) a tonne of CO2 equivalent.
This sum would be equivalent to 3.7 per cent of the cumulative operating profit of the combined DAX group in 2018, it said.
It said possibly heavily affected companies included chemicals firms BASF, Covestro and Linde; steelmaker ThyssenKrupp; automotive companies BMW, Continental, Daimler, and Volkswagen; and building materials firm HeidelbergCement.