Global CO2 Reduction – Businesses between Flood of Costs and New Market Opportunities

Efforts to reduce CO₂ emissions worldwide could result in additional annual costs in the three-digit-million range for businesses that do not start investing today in efforts to further reduce their own carbon footprint. These are the findings of a current study by the consulting firm Management Engineers (ME). The study also identifies the various market and earning opportunities that can arise due to increased climate protection.

CO₂: Becoming More Expensive

According to the study, the first major flood of costs related to CO₂ will hit European companies within the next three years. This is because the discontinuance of free allocations in the trading of EU emissions rights will have an impact on major, energy intensive companies - for example, the steel and chemical industries. Annual additional costs in excess of €180 million - according to ME calculations based on a typical company - will then threaten these and many other branches of the process industry.

Yet this is only an intermediate stage. By the year 2020, the annual additional costs for these businesses could amount to more than € 300 million. The presumption is that the international community is actually serious about climate protection and will establish a global emissions trading scheme based, for example, on the EU model. This would lead to a cost-driving "fight for pollution rights," with the extra costs being passed on to the market and thus impacting virtually the entire modern industry and service providers.

Using CO₂ as a Source of Income

At the same time, the study predicts that awareness of climate protection will continue to rise, as will the associated willingness of consumers to pay for it. This opens up new, profitable market opportunities in a wide range of industries which can now be tapped into technologically and supported by a marketing strategy that emphasizes the reduced carbon footprint.

New drive systems, less weight, greater efficiency - these are the technical challenges posed by climate protection, for example, for the automotive industry or for manufacturing and engineering. The chemical industry might offer diverse solutions in this context by providing innovative materials. The electrical engineering industry can do its part by developing energy-efficient control and drive technologies. For these and many other industries - construction or consumer goods, for example - the motto is: today's CO₂ reduction model may soon, on the tide of technical progress, become the market standard and thus an important source of revenue.

Fast, Strategic Action is on the Agenda

On this score, Hans-Ulrich Stamer, spokesman for the management of ME, said: "Businesses need to act now. Especially now - in times when many companies already have to realign their strategies - companies need to do everything they can to systematically explore and exploit business and profit opportunities that can arise from climate change. They need a customized and holistic CO₂ strategy which also targets investing in a cost-efficient reduction of their own carbon footprint. Companies which succeed in doing both are laying the foundation for future competitive advantages in a market that will be fiercely fought over."