Right into the heart of the matter: The 25th BBH Energy Conference discusses the big issues of the infrastructure industry

Transport transition, sector coupling, decarbonisation – are we missing any major topic? It is safe to say that BBH has formulated an ambitious programme for its 25th energy conference on 27 June 2017, putting on the agenda all of the big post-energy transition processes. And as the area of transport in itself is as complex a parallel universe as the energy industry, the discussion was kicked off already on the day before the energy conference in the framework of a transport symposium.

Day 1 or: Where is the transport transition?

“No sector is less susceptible of change than the transport sector, which has been shaped by cars”, remarked State Secretary Jochen Flasbarth in the afternoon of 26 June 2017. He believes that the automotive industry will continue to be the key industry in the area of transport, stating that this was why it is difficult for policymakers to enforce a change of direction. Yet, Mr Flasbarth is convinced that “the main driver of change will be climate protection”. Conventional cars would ultimately be replaced by battery electric vehicles, with local public passenger transport and car sharing as further means of conveyance contributing to opening up new perspectives for infrastructure. As for technologies transforming renewable energy, such as power-to-gas or power-to-liquid, Mr Flasbarth held that their use will most likely be limited to sectors lacking alternative drive technologies, for example aviation and shipping.

Nevertheless, the transport transition means more than just the energy transition in the transport sector. Early on in the discussion, it became clear that further factors are important: a change of mentality when it comes to mobility, aspects of urban planning and the question of how to use public space. The discussion repeatedly revolved around the issues of local public passenger transport and the necessity of reasonable planning in the area of local public transport.

Which contribution can the municipal transport sector make to promote the transport transition? “The responsibilities for implementing the transport transition mainly rest with the federal states. Therefore, the municipal transport companies within each state are best placed to bring about an integrated and intermodal transport system”, said lawyer and BBH partner Dr Christian Jung. In addition, the scope of application of Regulation (EC) No 1370/2007, the German Passenger Transport Act (Personenbeförderungsgesetz) and the federal state laws on local public passenger transport would have to be extended to also apply to transport models within the sharing economy. This is because the term local public passenger transport so far applies exclusively to the transport of third-party passengers and does not include types of transport where a passenger may act as a driver.

Day 2 or: Last exit decarbonisation

With currently 45 million cars that are registered and licensed in Germany, it is clear that a transport or mobility transition cannot be achieved by switching to electric vehicles alone. While doing so would mitigate the carbon emissions of the transport sector, it would not impact the traffic volume. Therefore, State Secretary Rita Schwarzelühr-Sutter advocates for cities with short distances, referring to the Leipzig Charta for sustainable urban planning, which was developed already 10 years ago in order to lay the basis for a new urban policy within Europe. Ms Schwarzelühr-Sutter emphasised that a sustainable transport policy was not necessarily directed against car drivers. Rather, the aim was to sensibly combine individual transport and local public passenger transport under the premise of clean transport.

He came, saw and spoke: As it happened, the conference participants enjoyed a spontaneous keynote speech by Mr Jürgen Trittin just afterwards. The former Federal Minister for the Environment competently stepped in to help bridge the time until the arrival of State Secretary Rainer Baake, who had been held up. “One would almost have to be grateful to State Secretary Baake for his delayed arrival”, commented one of the conference participants. Mr Trittin said: “Without an orderly and socially responsible phase-out of coal, we will experience a structural break. If we take the term ‘transition’ seriously, we have to avoid structural breaks.” It was rather embarrassing for Germany to qualify President Trump’s decision to exit the Paris Climate Agreement as utterly unreasonable in light of the fact that carbon emissions are decreasing in the USA – which does not hold true for Germany. Mr Trittin, therefore, called for an immediate shutdown of the 20 oldest coal-fired power plants. And for a coal phase-out without any dismissals on operational grounds. He also had a number of things to say on the topic of transport. Mr Trittin considers the German automotive industry to be 10 to 15 years behind the automotive industry of other countries. This situation could only be remedied by implementing framework conditions which would not actually reward climate-damaging conduct. High vehicle taxes combined with low prices for diesel would constitute an incentive for car drivers to use their vehicles a lot. Mr Trittin’s final call to “lift the cap on renewable energy in Germany” was strongly applauded by the attendees.

In his speech, State Secretary Rainer Baake returned to the topic of decarbonisation, stating that “decarbonisation does not mean deindustrialisation but modernisation”. While referring to decarbonisation in this context as a “unique opportunity for modernisation”, he also admitted that “the energy transition has so far focused primarily on the area of electricity. However, if we are to achieve our ambitious climate protection targets, we need to decarbonise the other sectors as well, above all the heat and transport sector. The so-called sector coupling will play a central role in this regard. To get more electric cars on the road in the transport sector and to encourage the replacement of old and inefficient oil burners with modern heat pumps in the heat sector, we need to make it a priority to reform, among others, the system of charges, taxes, surcharges and fees in the next legislative period, so that it no longer presents an obstacle to effective sector coupling.” In short: The burden in the area of electricity should be reduced.

After the three impressive keynote speeches by prominent politicians, BBH partners and, as always, skilful moderators Dr Ines Zenke and Prof. Christian Held set the stage for the following debate. The subsequent three panels of distinguished experts addressed the areas of infrastructure, technology and models for the future, i.e. grids, generation and consumption, as the energy industry would put it. To make the conference even more interactive, the audience was polled on specific subjects during the panels – with real-time results. Thus, it was possible to ascertain not only what the attendees thought of Prof. Christian Held’s tie (“appropriate for the occasion”) but also that 67% favoured small installations and short distances, i.e. a decentralised infrastructure. This is all good and well – but how can we create such infrastructure under the premise of sector coupling? This was one of the central questions explored by the first panel which included State Secretary Rainer Baake, Member of Parliament Arno Klare (SPD), Dr Dieter Steinkamp (CEO of Rheinenergie AG) and Jürgen Flenske (President of the Association of German Transport Companies). The panel unanimously agreed that the industry as a whole needs to explore efficient solutions while policymakers should establish suitable framework conditions. However, as long as electric busses cost twice as much as busses running on diesel, it will hardly be possible to replace the local public transport fleet overnight without state funding. Similar investments will need to be made into the publicly accessible charging infrastructure as well as into private charging facilities. After all, one of the reasons why the energy transition has been so successful is that billions have been invested into it. The transport transition will require similar sums. Likewise, getting across the message of the importance of the transport transition will likely be at least as difficult as bringing home the importance of the energy transition.

In the second panel, Jens-Holger Kirchner (State Secretary for Transport, Senate Department for the Environment, Transport and Climate Protection, Berlin), Dr Thomas Schwarz (Head of Government Affairs Berlin at Audi AG), Ralf Nagel (CEO of the German Shipowners’ Association), Prof. Dr Christian Küchen (CEO of the Association of the German Petroleum Industry) and BBH partner Dr Martin Altrock discussed the topics of energy sources and visionary technology. Do we need a political coordinator for sector coupling and alternative fuels? Opinions on this subject varied greatly in the panel. A poll of the audience, however, showed that the majority considered batteries and fuel cells to be the most exciting technologies for the energy transition.

The third expert panel consisting of Christian Hochfeld (Executive Director of AGORA Verkehrswende), Prof. Dr-Ing. Gerd-Axel Ahrens (TU Dresden), Willi Loose (CEO of Bundesverband Car Sharing e.V.) and BBH partner Dr Roman Ringwald discussed possible models for the future. A poll of the audience before the discussion found that only a small minority has so far made use of digital offers regarding transport (12% in the area of car sharing). The audience agreed that a lot remains to be done. The important role of municipalities was emphasised again in the discussion on models for the future that are made possible through digitisation. Nationwide tenders for innovative transport projects, which are an established procedure at international level, were discussed as well as a roadmap or an alliance for the transport transition similar to the Ethics Commission for a Safe Energy Supply. In places like China, the pressure to innovate was a lot greater than in Germany, which meant that car and bike-sharing schemes were well established across the country. In the course of the discussion, it became clear that it is not just about the development in the area of transport, but in the economy as a whole concerning millions of jobs in the transport sector.

Will we be successful in implementing sector coupling? Considering the debates at the 25th BBH Energy Conference regarding the complex interconnections between the energy and the transport transition and the great challenges on the road to decarbonisation, one would not necessarily have expected a positive answer to this question. However, the conference participants remained optimistic: 25% were “absolutely certain” and a respectable 43% were “hopeful” that sector coupling will succeed. It was in a similarly optimistic vein that Prof. Dr Klaus Töpfer (AGORA Energiewende) gave the concluding speech, calling for more than purely theoretical discussions and for efforts to translate insights into concrete action. So, let’s get to work!

Becker Büttner Held is a leading provider of advisory services for energy and infrastructure companies and their customers. Energy and supply companies, particularly public utilities, municipalities and local authorities, industrial companies and international groups are among its core clients. BBH advises these and many other companies and organisations in all legal matters and also assists them with business and strategic advice.

Contact:

Dr. Ines Zenke
Lawyer, Partner
Tel +49 (0)30 611 28 40-179
ines.zenke(at)bbh-online.de 

Christian Held
Lawyer, Partner
Tel +49 (0)30 611 28 40-48
christian.held(at)bbh-online.de

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