Dr. Arend Oetker, KWS SAAT AG
Release Date: 2009-08-17
Which role does the German Council on Foreign Relations play in Germany’s Participation within the international community?The German Council on Foreign Relations focuses on political and security issues. I am also Vice-Chairman of the Federation of German Industries which is more focused on economic and energy issues, so I act as a bridge between the two. At the same time, one of my companies is operating in the biomass industry and is trying to become more involved in China with good prospects in the future, so I am personally involved in the renewable energy topic. My experience in the German community for research and development has led me to focus on cooperation in this field rather than the production and sales side.
The debate about renewable energy is a debate between government, the scientific community and business. This debate is carried out differently in each country, what characterizes the discussion in Germany?
It is a very active discussion, maybe even stronger than anywhere else, partly because of the Chancellor but also due to our history and the role of the Green Party which has a heritage of 25 years that has led to a strong movement in the German society. This can be a problem when you look at biogenetically engineered food for example. I am a food manufacturer and the Green Party can create obstacles to the development of the food industry. There exists controversy between the use of biomass for energy or food which created tensions last year because the target for the share of biomass in the renewable energy mix was set too high which started a debate on how to use the soil and for what purpose. Environmental questions figure prominently on the agenda of politicians and the business community and are also on the priority list of German voters.
At the World Business Summit on Climate Change that took place in Copenhagen last May, the business community essentially asked governments around the world to create a clear, long-term framework for the development of the renewable energy and green technology industries. Is this call shared by the German business community?
Sometimes the Federation of German Industries is perceived to be preventing the establishment of ambitious targets but there are two sides of the coin. At the moment, we are in need of more exports as a way out of the economic crisis but on the other hand the transfer to another kind of energy source has to be digested and crystallized before we can truly enhance cooperation in research and development with China. You have not only to consider the environmental impact of such measures, but also the impact on jobs; how many are being lost or gained as well as the timescale of this process. Politicians like to push ahead but sometimes we have to ask how that is realistic.
Where does the Federation of German Industry draw the balance between protecting the traditional industries of Germany that created the reputation of ‘Made in Germany’ but are facing difficulties today and supporting emerging green sectors that are destined to be important drivers of economic growth in the future?
Let me give you the example of the emission trading system which is one tool in governing this process. Energy intensive industries like steel and cement have to be protected, so there has been discussion on an international level concerning which concessions to grant and for which time period. This topic will be on the agenda of the business community. The discussion is taking place in Brussels rather than in the international arena, which is why Minister Gabriel travels often to Brussels along with Matthias Machnig, his number two at the Ministry, who is both knowledgeable and smart.
Sometimes it is not very easy for politicians to see both sides of the coin. Last year, Chancellor Merkel was accused of neglecting the climate change issue by granting protection measures to the car industry. The German car industry is hugely complex and it remains to be seen how quickly it can transfer energy efficient, low emission engines and implement new technologies required for electric and hybrid vehicles. This all depends on research which takes time, so yes, politicians have to create these frameworks but they must be digestible by the applicable industries. This is a heavy debate in Germany, but we are leading the way in the European Union.
When Chancellor Merkel was elected she was presented as the Green Chancellor, but since then she seems to have lost a lot of her green credentials by putting the German economy first. Is this change in public perception justified?
In a financial crisis there is always tension. I recently spoke with three Senators and five Members of the House of Representatives in Washington about the issue of climate change and what their attitude would be by the end of the year. I know now that there is reluctance in the US to get a deal through the Senate even among some Democrats. However, it should not be a problem to pass through the House of Representatives because of the job crisis in their constituencies. They ask themselves what kinds of industry they have in their constituencies and when the midterm elections are coming; it is hard to campaign on climate change when people ask how many jobs will be lost rather than how many will be created. Holding elections every two years creates a lot of obstacles. Fortunately Barack Obama is a good speaker; maybe he can explain that every kilowatt hour generated with renewable energy creates eight times more jobs than is the case with a traditional coal fired power station.
It seems that the global debate on climate change is increasingly becoming a bilateral negotiation between the US and China. While Germany is one of the world’s leading economies and a frontrunner in the field, the country seems to be a bit sidetracked; is this something that should concern Germany?
Yes and no. We definitely are in favour of these bilateral talks. The Chinese need not to be convinced of the importance of climate change, but they are still in a developing phase and has to take care of sufficient employment, both in rural areas and industrialized zones. China’s main goal is to stabilize the situation. Worldwide, we are looking for a burden sharing mechanism and the Chinese feel like they need more allowances then what is currently offered, especially in coal.
Wouldn’t it be easier to index CO2 emission rights with economic growth, units of GDP, or per capita emission allowances?
The Chinese believe that they require 8% economic growth per annum. Although their statistics are not as accurate as others, taking them as they are and linking them directly to CO2 emissions could be one approach. One of the main problems right now, in the context of the economic crisis, is that the mindset is not there as governments around the world are bailing out their economies.
The biggest danger is that the money, time and effort necessary to address the long term impact of climate change is being neglected which will create an even bigger problem. I proposed to Chancellor Merkel the possibility that COP 15 is not going to achieve the result that everyone would like and as such we should have another conference in 2010 in the United States in Chicago. As Obama comes from Chicago, Why don’t we give him the floor to propose something which the Senate could finally agree upon and make a big push to get it passed? Convincing the American people will be much easier if a solution is presented on American soil as an American idea that will benefit them. Their way of thinking has to be changed, which is not easy but there is hope that it can be achieved when they are hit by the impact of having not done this previously. The same applies to China; we need to have these conferences on their soil, not in western industrial states. The question of what can be achieved by competition and what by cooperation will be a key issue due to the American propensity to think in terms of competition rather than in terms of cooperation.
Technology transfer is another essential issue to reach a meaningful climate deal. How can Germany transfer technology to China while not losing its competitive edge in green technology?
We have to be one step quicker and more creative with our research. The Minister for Education and Research, Mrs. Schavan, has highlighted the energy sector as an area for which the federal research budget has to be increased. We do fail in delivering a consistent energy policy due to many conflicts of interest, such as the future of our nuclear power stations. This conflict exists within the big energy companies such as E.on and RWE, which each have a board member dedicated to this subject and are developing alternative business concepts.
To which extent are the research priorities of government and the scientific community aligned with the interests of business?
To help align these interests is exactly the policy the Stifterverband fur die Deutsche Wissenschaft represents, which brings business, science and politics together at one table. The government is participating not only on research matters, but is also involved in environmental or labour topics depending on the issue being discussed. This creates a joint approach rather than business having a lobby and science demanding as much money as possible leaving the government to decide based on bureaucratic reports. We create specific proposals using a balanced method.
German technology played an important role in the economic rise of Japan, while most German companies tried to shield themselves from the Japanese market. How can Germany avoid the same mistake with the rise of China?
It is not easy on a national level, but on a multinational level it is even more complicated, the process of conferences such as Copenhagen coming up are a dreadful procedure, as a businessman you get somewhat nervous sitting there, but there has to be the unnecessary to give everyone the voice they want to have. In the end there has to be some think tank procedure which guides the process and then negotiations at a bilateral level whether its US-China, China-EU but you cannot forget India or Russia either.
How did you as a business man get involved in the bioenergy field?
I am a manufacturer basically but last year I went to Greenland with Swedish, German and American representatives of politics, business and science to see the ice cap melting firsthand and hold a conference through the Rockefeller Foundation. I’m a fourth generation family businessman, I think long-term, short-term doesn’t interest me and I don’t look at the quarterly report, but now I work daily on the subject of climate change and ask my own companies to come up with energy saving ideas and implement them as a place to start. In business you try to reduce spending, so if you tell me that investments will pay off in the long-term then I will go for it. This is how mindsets change. For me, this trip certainly brought big change and I took one of my children with me on this trip because you have to transfer that knowledge. I also convinced my CEO to take the trip as well.
Where is the balance between being idealistic and doing things that are good for business?
This is not being idealistic, this is a real issue of survival and need; the company that is best in energy saving and climate consciousness will be more profitable down the line.
Since Germany cannot be a world leader in every field, in which areas can Germany set an example for the rest of the world in the coming decades?
We are pretty good in wind energy already and have sold our wind turbines to many countries; solar would likely be the next one. I have consulted the government and said we need to do more; create research clusters which we are doing in Thuringia-Saxony. At the same time we have neglected nuclear energy as continued research has been blocked by the government. This is a problem because we have not invested in it as much as we should have in the past 20 years. Now we have a special commission on climate change within the Federation of German Industries which is led by the CEO of Siemens, Peter Löscher, and we are trying to push nucelar energy into the next phase. Coal is certainly an issue but our carbon capture research is promising, and China certainly needs knowledge in coal so there should be more projects to further this research.
It has been said that China already overtook the rest of the world in clean coal technology, so maybe this is an area in which the Germans can learn from the Chinese?
It is possible, Chinese are very clever and not only so in copying.
What is your perspective on how Germany and China should cooperate in the coming decades?
There are big business opportunities for both countries. What we are lacking are complementary partners for family owned companies from Europe or the US. To give you a comparison, I’m heading a conference in November with the Sheikh of Bahrain on family owned businesses of the Arabic and European world. It is a matter of relationships: when you partner with a family business size doesn’t matter so much, it becomes a long-term relationship which is a concept the Chinese like very much on a state level, they like the stability. My father-in-law went to China yearly throughout the 1950s, 60s, 70s and 80s: for decades every Chinese politician knew his name. This kind of continuity is what the Chinese like. So perhaps we have to be more creative in doing this at a company level.
| Company: | KWS SAAT AG |
| Position: | President - German Council on Foreign Relations |
| Country: | Germany |