Politicians in Germany have to work with industry leaders if the country wants to reduce its CO2 emissions, says Martin Brudermüller, CEO of BASF, one of the largest chemical producers in the world.
“If we want to be successful in Germany’s and the EU’s decarbonization plans, we have to come up with a completely new type of cooperation between business and politics,” he told CNBC-Annette Weisbach on Wednesday.
“We are currently seeing that politics is pursuing one goal after another: Can it be 10 years faster? 10% more reduction? So it’s a race for ambition,” he noted. “I sometimes wonder whether society and politics need that [have] a real reality check. There is no lack of ambition, but now we have to get involved in the how … to really say where do we want to be? What does it take to get there? That is the effort in which politics is not involved. “
A federal election is drawing closer in Germany with the vote for September 26th, and the chance that the Greens in Germany will become part of a future coalition government is great. The Greens are currently seen with 17% of the vote, the conservative alliance of the outgoing Chancellor Angela Merkel, the CDU / CSU, has 21% of the vote and the Social Democrats, according to the Politico poll, with 24%.
The new federal government, in whatever form, must team up with the industry leaders, said Brudermüller, “in order to create a positive regulatory framework. It can no longer prohibit, restrict, no longer allow – it must allow. What do you really need to achieve that? “Be successful and stay competitive on this path?”
While a coalition government could take weeks to form, it is likely that the Greens, once a fringe party, will join the government and have a strong influence on energy policy, taxes and investment. With the Greens soaring in popularity this spring and summer, markets are prepared for the party to gain more power and prominence in government.
“It will be some time before a new government is formed, but if it does we expect a government that is more focused on combating climate change and keeping fiscal policies accommodative to fuel economic recovery,” said Dean Turner and Maximilian Kunkel from UBS Global announced that Wealth Management on Wednesday.
“We don’t expect a big market reaction to the elections. This is because coalition agreements can take weeks, sometimes months, so investors will not know the outcome for some time,” they added.
As the central party of their manifesto, the Greens have an ambitious spending plan. She has outlined plans to spend 500 billion euros (592 billion US dollars) on infrastructure and, over the next 10 years, on climate change in Germany. The party wants to restructure the country’s economic model into a “social-ecological system” and want to accelerate the expansion of renewable energies and phase out coal energy by 2030.
She also called for higher taxes for the rich and a relaxation of the so-called German debt brake (which limits the government’s structural net debt), which would allow Germany to raise more money in the public markets.
Experts believe that green investments will increase dramatically in the long run, but there are some concerns among companies, especially energy-intensive companies like BASF, that this will lead to tax hikes. They therefore fear that this could make them less competitive.
BASF is a multinational company based in Germany, whose products range from chemicals and plastics to crop protection products.
Brudermuller told CNBC that the new government’s tax policy should be closely monitored and that the government must help subsidize any transition. “We really have to see how we see the whole package. I guess what matters [is that] If companies are to make the transition, they also need to make sure they are making the money to invest. “
“I think if this is a societal demand that you stand up for the transformation, then it is also a societal duty to help you get involved at the beginning of this journey. So new innovative technologies, pilot plans, they have to be subsidized and financed. .. So it’s not just taxes, but public funds as well. And that’s this positive framework I’m talking about, “he said.