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COP25

No such thing as a free lunch

Allianz SE | Munich | Dec 03, 2019

Four years have passed since the Paris Agreement was signed, but it is becoming increasingly clear that progress and policies on emission reductions have been largely insufficient. In a context of rising pressure to meet emissions targets, the COP25 summit is likely to be a catalyst for tightening and intensifying climate change regulation in the years to come. Indeed, the European Parliament just declared a climate emergency and the EU Commission is looking to upgrade national emission reductions to 50% by 2030, from 40% during the course of 2020. Almost every sector will be impacted by these measures. 

To calculate the impact of increasing regulatory intensity on global industry, we analyze the most important measures that are currently enacted or under discussion, grouping them into the following categories: carbon pricing, energy and efficiency mandates, mobility regulations and industry-specific taxes, fines and levies. We calculate that the negative impact will be nearly USD 2.5tn over the next ten years.

The energy sector will be hit the hardest, with an estimated cost of USD900bn. The steel sector follows, with a cost of USD 300bn. Air and marine transport faces a cost of USD55bn. Including a number of not yet quantifiable measures, such as shipping speed limit reductions, further emissions cap reductions and industrial regulations could provide further upside to the cost impact. Other sectors at risk include automotive, chemicals, pulp and paper, retail and machinery/manufacturing

Contact

Catharina Hillenbrand-Saponar
Euler Hermes
+33 (0) 184114729
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Aurelien Duthoit
Allianz Trade
+33 (0) 184114504
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Alexis Garatti
Euler Hermes
+33 (0) 184114232
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Maxime Lemerle
Allianz Trade
+33 (0) 184115401
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Marc Livinec
Allianz Trade
+33 (0) 184116198
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COP25: No such thing as a free lunch