Opinion article Finanz & Wirtschaft: Director Stephan Mumenthaler

The clear Yes to the Climate Protection Act shows: The net zero target 2050 is to be achieved with a policy of incentives. In order for industry to be able to contribute to this in the future, internationally coordinated approaches are needed that enable new technologies and innovation.

Because the challenges of climate change are global, internationally coordinated approaches are needed - at the same time, everyone should make a contribution. The Swiss electorate has given a clear verdict with 59.1%: Switzerland should become climate-neutral by 2050 and not emit more greenhouse gases into the atmosphere than are absorbed by natural and technical reservoirs (net zero target).

To achieve this goal, the following measures are planned: The replacement of oil, gas and electric heating systems with climate-friendly heating systems is to be supported with CHF 2 billion. Businesses in industry and commerce that use innovative technologies for climate-friendly production are to benefit from subsidies in the amount of CHF 1.2 billion.

Switzerland  performing above average

We have also committed ourselves to a Yes vote: Our member companies support the net-zero 2050 target as a fundamental goal orientation and are in favour of proactive and effective climate protection. The chemical-pharmaceutical industry is already making a significant contribution to reducing greenhouse gas emissions - these reductions are achieved by optimising processes in their own plants as well as their supply chains. In addition, the chemical industry makes a substantial contribution to achieving climate goals: without high-performance chemicals, there would be no photovoltaics, no wind energy and no hydropower - and without highly developed insulation materials, there would be no energy efficiency in buildings. Products from the chemical industry are thus an indispensable part of the energy transition.

However, as a carbon-based industry, the transformation towards climate neutrality is not easy to manage. All the more reason for targeted action to avoid undesirable effects. Switzerland already performs above average in the area of climate protection. According to the Organisation for Economic Co-operation and Development OECD's assessment of international energy policy, it has the lowest emissions intensity of the more than thirty member states of the International Energy Agency (IEA). This is not only due to the high shares of hydropower and nuclear power in electricity generation, but also to well-chosen climate policy instruments, such as the target agreement system.

Goal agreement system works

More than 4000 companies, including many in the chemical, pharmaceutical and life sciences sectors, have already concluded target agreements on emissions reduction with the Energy Agency for Industry (EnAW). The CO₂ tax exemption, combined with binding agreements on an ambitious emissions reduction target, enables companies to contribute to global climate neutrality while remaining internationally competitive.

The track record of this successful cooperation speaks for itself: Since 1990, industry has been able to reduce CO₂ emissions by around 35%. At the same time, industry, business and households in Switzerland are consuming less and less energy: energy consumption per capita (final energy, excluding international air travel) has fallen by 25% in Switzerland since 2000. This is in spite of a 19% increase in real GDP per capita over the same period.

Good instruments should be continued

And this is how the target agreement system works: EnAW helps Swiss companies to implement the climate protection measures that are best for them - together with EnAW experts, tailor-made measures are developed for each company. They include practicable and economically sensible measures that are most effective for the specific company. In this respect, the planned expansion of target agreements with a reduction obligation to all companies as part of the revision of the CO₂ Act is pleasing.

Equally positive is the fact that the EnAW was recently officially awarded the contract for the pool of advisors in the WTO tender "Target Agreements post 2020". The successes that the Swiss economy has achieved with the target agreements are being rewarded, and the long-standing good partnership with the Confederation can be continued. In this way, the EnAW will be able to continue to offer its advisory services in the future and support Swiss companies in reducing their electricity consumption and greenhouse gases.

Climate protection and energy supply are correlated

A secure energy supply at competitive costs is a key factor for Swiss industry. Security of supply must be guaranteed uninterrupted in the future, even with an emerging electricity and gas shortage. Because if energy becomes scarce in Switzerland, the federal government and the cantons take measures to restrict consumption, with massive cuts for the manufacturing industry.

In this case, for example, trading  contingents can be a pragmatic way to partially relieve the economy. In concrete terms, this means that if a company reduces its energy consumption for cost reasons, it can sell this saved amount to other companies. In return, large consumers with high energy consumption can acquire the consumption rights that have become available in this way.

Good framework conditions and the right incentives

Overly conservative regulation of the use of emergency power plants could also be the downfall of industry in the event of an energy shortage. This is why pragmatism and entrepreneurial thinking are called for here: emergency power plants can make an important contribution to power grid stability and gas consumption reduction during an emerging energy shortage situation.

The chemical-pharmaceutical industry wants to continue to make its contribution to meeting Switzerland's climate targets and remain a reliable partner in the process. For this to happen, however, the framework conditions must also be right. With regard to politics, this means thinking more comprehensively about the future of energy, enabling technologically broad-based approaches to solutions and, in doing so, relying on the right behavioural economic incentives. In this way, we will be able to achieve the ambitious energy and climate goals that Switzerland has set for itself as effectively and efficiently as possible.

Dr. Stephan Mumenthaler, Director of Scienceindustries, Trade Association Chemistry Pharma Life Sciences