Emissions are to fall to 140 million metric tons per year by 2030, according to the federal Climate Protection Act. The challenges for decarbonizing the industrial sector are even more significant than in other sectors. Compared to power generation, building energy, or the transport sector, industrial processes are very heterogeneous. In some cases, climate-neutral technologies are still at the beginning of their development or are associated with high costs, such as the electrification of high-temperature processes. Moreover, process emissions cannot be reduced by switching to renewable energies.
Moreover, production in the German industry has been increasing for years, displacing, for example, advances in energy efficiency in the energy balance. Added to this is the fact that industry in Germany and Europe is in international competition. Costs for reducing emissions can therefore only be passed on to end customers to a limited extent.
There are concerns that production facilities could be relocated abroad. Thus investments would not be made in Germany if decarbonization costs in Germany were significantly higher than in other countries. Simultaneously, the climate benefits could be limited because emissions would only be relocated (“carbon leakage”), i.e., they would no longer be generated in Germany but in another country. Clever approaches are needed here to ensure that the German industry remains competitive while reducing CO2-emissions at the same time.
