Últimas novedades de DIW sobre industria, mercado eléctrico, y financiación sostenible

Karsten Neuhoff nos pone al día de lo que está haciendo en distintos frentes. En alguno de ellos (el de industria), en colaboración con nosotros.

1. For the industry sector, we have investigated with our European Partners of the Climate Friendly Materials Platform how individual policy instruments fit together and can thus unlock investments into climate neutrality. In the study “Green deal for industry: a clear policy framework is more important than funding” we combine the puzzle pieces into a policy package. Such a package can resolve conflicts that are otherwise difficult to address with individual instruments, for example between effective carbon pricing and carbon leakage protection or between empowering and committing companies or governments to act.

To inform this work, Xi Sun and Mats Kröger reviewed with colleagues at DIW the learning experience from previous green recovery packages and Olga Chiappinelli and Frederik Lettow quantified together with our European partners investment potentials and policy needs in the basic material sectors. Jörn Richstein analyzed with our Polish partners from Wise Europe how carbon contracts for difference can reduce financing costs and the carbon price required for investments in climate neutral processes.

Based on an earlier study on border carbon adjustments and alternative measures with Alice Pirlot, Oxford University, and Roland Ismer, University Nürnberg-Erlangen, we quantified with Stephan Pauliuk, Freiburg University, incentives and risks for the value chain and consumers. In the research supported by the Mistra foundation, we find very small and only progressive distributional effects. Applying a carbon leakage risk indicator to the value chain, we find potentially significant exposure where carbon border adjustment mechanisms focus only on imports or part of the value chain. In a study for the German Finance ministry on the National Emission Trading System, we find that carbon leakage risks are very limited and moderate outside of the basic materials sector.

2. For the power sector, a white paper for power market design with partners from the German science ministry funded Kopernikus Synergie research consortium points to elements that will be essential for the electricity spot market in the transition to climate neutrality, like bid formats and nodal pricing. These elements are particularly important for the realization and effective use of demand side flexibility as can be seen in our studies on industrial demand response by Jörn Richstein and on the role of aggregators in facilitating industrial demand response by Jan Stede.

In the context of the ongoing debates on the use of public budgets or carbon pricing revenues to reduce electricity charges, also alternative options to address distributional concerns should be considered. On behalf of the German Finance ministry, we assessed different options for per head reimbursement and considered existing structures of the German health insurance system most effective.

3. In sustainable finance, the EU taxonomy defines uniform criteria for economic activities aligned with EU climate mitigation targets. Franziska Schütze and Jan Stede used responses in a stakeholder consultation to assess the robustness of the taxonomy criteria in different sectors – raising the bigger question of how far the taxonomy can take us towards climate neutrality and what additional forward-looking information is required.

With the Sustainable Finance Advisory Group to the German government, which I am a member of, we recommended a variety of policy measure to ensure the financial sector can support the transformation of the real economy towards climate neutrality and sustainability. Forward looking reporting of firms, not only on their reference scenario, but also on a policy scenario (climate neutrality) with more stringent climate policy, is one key recommendation. This is essential for risk management as was illustrated in an analysis for residential mortgages by Franziska Schütze. But it also ensures that companies linked to carbon intensive activities can obtain access to finance – if they credibly demonstrate how their strategy is resilient to more stringent climate policy. Details are discussed in a policy brief with partners from the sustainable finance research platform funded by Mercator foundation.

4. How international climate finance can support just transitions to climate-friendly pathways is a question we investigate together with our partners of the Snapfi project in India, South Africa, Indonesia and Brazil with IKI funding from German environment ministry. A cross country study with 12 case studies coordinated by Heiner von Lüpke illustrates the multi-faceted interaction between the domestic policy levels and international climate finance. A review of the socio-economic impacts of the COVID-19 pandemic on emerging economies captured the fragile status of countries’ green stimulus packages, and pointed to the role that international climate finance could play to enhance such green elements in domestic recovery strategies.