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Emissions to zero – “The longer companies wait, the more expensive it becomes”

The costs for companies to adjust to future climate protection requirements are increasing from year to year.

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Emissions to zero – “The longer companies wait, the more expensive it becomes”

The costs for companies to adjust to future climate protection requirements are increasing from year to year. Lisa Alexandra Rethen, head of the consulting firm Bosch Climate Solutions, warns of this.

“The endpoint of CO₂ reductions is clearly set, with the EU aiming to become carbon neutral by 2050. The longer companies wait until they act, the shorter the period for the necessary reductions - and the more expensive it becomes," says Rethen in an interview with WELT.

Her company, a spin-off of the industrial giant Bosch, mainly helps medium-sized companies to reduce their CO₂ emissions and their own energy consumption.

Last but not least, the climate conference in Egypt shows that politicians are putting increasing pressure on industry. The requirements for CO₂ reduction are passed on to companies via sector targets, instruments such as emissions trading or direct legal requirements, for example for supply chains. The controversial taxonomy rules of the European Union are also intended to increase the pressure on the economy from the capital market.

Nevertheless, many smaller companies are still avoiding the topic. Last but not least, an evaluation by the management consultancy Capgemini in mid-October shows that they urgently need the admonition of experts like Rethen. In it, the consultants for the automotive industry found that 70 percent of companies are striving to reduce emissions across the entire value chain, i.e. from procurement to operation to recycling of the cars.

When it comes to implementation, however, they are apparently too slow. According to the Capgemeni experts, the industry has only been able to reduce its greenhouse gas emissions by five percent since 2018. And they warn: “At the current pace, auto companies will not be able to meet the Paris climate agreement’s overall goal of net-zero emissions by 2050.”

Although "net zero", a current favorite word of managers, would theoretically be easy to achieve: by selling indulgences. The Bosch Group achieved this “neutral position”, as it calls it, as early as 2020.

The company had drastically reduced its CO₂ emissions in previous years - and compensates for the remaining emissions through compensation payments to projects that reduce mankind's CO₂ emissions elsewhere on earth.

Last year, Bosch “neutralized” 907,000 tons of CO₂ equivalents in this way. Two years earlier, global emissions had more than doubled.

According to the 2019 sustainability report, the Bosch Group accounted for around 2.2 million tons of CO₂. Rethen and her colleagues are now to sell the industrial giant's experience on the way to climate neutrality to other companies as a consulting service.

From Rethen's point of view, offsets are the last step in making companies climate-neutral. Her work is mainly related to saving energy in production and supply chains and switching her corporate customers' energy supply to climate-neutral sources.

“Often, at the end of the changeover, around a third of the emissions that cannot be avoided are still left in the company. With this remainder, it is then an entrepreneurial decision whether to neutralize it with compensation or forego it for the time being,” says the consultant.

This decision is likely to be difficult for many entrepreneurs in view of the looming recession in Europe, because the costs for the climate drain are rising. "The high-quality compensation projects are currently becoming scarce," says Rethen.

“We are observing rising prices on the market.” Although she only advises her customers to participate in certified projects according to the so-called Gold or Verified Standard, which usually also have a social component.

That then has nothing to do with the sale of indulgences, says Rethen. Such certified projects include the construction of biogas plants in Vietnam, the distribution of efficient cookers in Burundi or the conversion of public buses in Senegal to solar-electric drives.

From the point of view of the climate consultants, actual energy savings in companies are much more important than these compensatory measures. Emission reductions of five to eight percent are often still possible, although most industrial companies save energy wherever possible for cost reasons.

As examples of measures that can be implemented quickly in factories, Rethen cites the switch to LED lighting, more efficient compressed air systems, more intelligent system shutdowns and heat recovery.

The currently high energy prices have changed the calculation basis for such measures. "Many projects to improve energy efficiency didn't pay off for years, but that's changing now," says Rethen. While it used to take five to seven years for corresponding investments to pay for themselves, this time has now fallen to three to five years.

The second step towards climate-neutral operation is to build up your own electricity generation, explains the consultant. So solar systems on the factory roof; sometimes wind turbines can also be set up or companies have old water rights that can be the basis for a small hydroelectric power station. In addition to the climate argument, the increased security of supply that comes with it now speaks in favor of such systems, says Rethen.

Finally, the consultants, in cooperation with the industrial customer, convert the electricity supply to green electricity. In many countries around the world, this is not much more expensive than conventional electricity. In the balance sheet, however, the total amount of energy is then with zero CO₂ emissions.

For Bosch, this "green electricity supply" was the main lever for the "neutral position". According to the company, energy consumption has recently increased significantly, from 7,497 gigawatt hours in 2020 to 8,042 gigawatt hours in 2021. Bosch promises that efficiency measures will reduce it drastically by 2030.

In the foreseeable future, the group will probably also have to put pressure on its suppliers if it wants to gain the seal of climate neutrality beyond its own production. So far he hasn't. But at the latest when this pressure is passed on downwards by the large companies in the industry, time will also run out for the smaller companies.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 5 a.m. with the financial journalists from WELT. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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