#ZEWPodcast: How Does the Socio-Ecological Market Economy Work? (Pt. 2)


ZEW President Achim Wambach Presents His New Book

According to ZEW President Achim Wambach, an international alliance against climate change - a climate club - is needed to stop the global climate catastrophe.

Emissions trading, climate neutrality by 2050 and a border adjustment system – the EU has set itself ambitious climate targets. But effective climate protection worthy of its name must be thought of internationally – of this ZEW President Professor Achim Wambach is certain. In the second part of the #ZEWPodcast on his book “Klima muss sich lohnen” (“Climate Protection Must Be Worthwhile”), the economist talks to Carola Hesch about ways in which the green transition can work on a global level.


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The border adjustment system is an example that the EU is not lacking ideas to improve the CO2 balance in its own economic area. Countries that produce climate-damaging products outside the EU have to pay compensation when importing these products. ZEW President Achim Wambach recognises that border adjustment has a positive effect on the EU’s climate balance. However, in order to stop the global climate catastrophe, an international alliance against climate change is needed – a climate club. “The idea behind a climate club is for the larger economic areas to join forces – so not just Europe, but perhaps Europe and the USA, and ideally China as well,” says Wambach. Only together could these largest economic areas, which account for almost half of global GDP and emissions, introduce a border adjustment system that would in turn create incentives for other countries to participate in climate protection, says Wambach.

Climate protection and growth must go together

But how do you get countries like China and India to join such an agreement? After all, these countries are not prepared to deprive their populations of growth and prosperity in order to save the climate. “We have to combine climate protection and economic growth: We see this in the US, or in Europe; we have had economic growth in the last 30 years, economies have expanded more than 50 per cent and at the same time emissions have decreased,” says Wambach. Economic growth is one thing above all: increased productivity through innovation. This is the key to a successful model in which other countries also want to participate, says the ZEW president.

“The EU taxonomy is not a good idea”

The taxonomy created at EU level, which classifies certain investments – including those in nuclear energy and gas-fired power plants – as sustainable by law, is, however, a false step in Wambach’s view: investments are not per se good or bad, black or white. Some investors also want to invest in companies that are not sustainable at first, but whose business plan to become sustainable in the future convinces investors – such investments are disadvantaged by the taxonomy, says Wambach: “The taxonomy pretends that there is only one rule.” Both in the podcast and in his book, Wambach argues for openness instead of prohibitions: Companies need planning security, he says, so that it is also worthwhile to invest in innovations, because: “Who knows what other inventions there will be?”