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Statement 74Th COFFI Final 2016 09 16

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Statement 74Th COFFI Final 2016 09 16 STATEMENT submitted by the Delegation of Germany to the 74th Session of the UNECE Committee on Forests and the Forest Industry 18 to 20 October 2016 in Geneva Federal Ministry of Food and Agriculture Bonn, 2016 1. General economic trends 1 1.1 German economy in good shape Germany is enjoying solid growth. Despite the difficult international environment, Germany’s economy grew by a total of 1.7 % last year. Unemployment is at its lowest level since the country’s reunification. Last year, real gross wages and salaries per employee recorded the highest increase for more than two decades. The budget of the Federation, the Länder, the municipalities and the social insurance funds was close-to-balance in 2015 for the fourth year in succession. Working from what is a fundamentally favourable situation, the Federal Gov- ernment is continuing its economic and fiscal policy aimed at investment and sustainable growth. A key role here is played by digitisation. The Federal Government is embracing the digital transformation and is working with businesses, trade unions, the scientific community and civil society to put the conditions in place for successful digitisation. There is a need to adapt the regulatory framework of the Social Market Economy to the requirements of the digital world and – both at national and at European and international level – to create scope for innovation and to permit the individual to retain control of his/her data. The upturn in the German economy softened somewhat in the second half of last year. The slower growth in the emerging economies meant less dynamic exports and corporate invest- ment. However, industrial demand picked up again towards the end of the year. At the same time, business sentiment improved. The labour market continued to develop favourably right up to the end of the year. The ongoing economic dynamism is mainly being driven by the domestic economy, and particularly by consumer spending and investment in housing con- struction. The low oil price and the comparatively weak euro exchange rate are also having a positive impact on economic development. On the other hand, the fall in growth in many emerging economies continued to reduce the rate of growth. For 2016, the Federal Government expects an annual average increase in gross domestic product of 1.7 % (table 1 ). Adjusted for working days, gross domestic product will grow by 1.6 % this year, or 0.1 percentage points more than last year. The continuing expansion of employment, together with the appreciable rises in income, forms the foundation of the ongo- ing dynamism in Germany’s domestic economy. As in previous years, the additional em- ployment will chiefly be created in the services sectors. 1 http://www.bmwi.de/BMWi/Redaktion/PDF/J-L/jahreswirtschaftsbericht-2016- englisch,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf 1 As demand picks up speed, the companies will gradually step up their investment over the course of the year. Despite this, inflationary tensions are not expected. Macroeconomic capac- ity utilisation will be generally normal. Profits will increase this year, not least due to falling oil prices; the share of wages is likely to decline slightly. Unit wage costs will mark a moder- ate rise. Annual Table 1: Selected key figures for macroeconomic 2014 2015 projection trends in the Federal Republic of Germany 1) 2016 % change on preceding year Gross domestic product (output approach GDP, real) 1.6 1.7 1.7 Total employment 0.9 0.8 0.9 Unemployment rate in % (Federal Employment Agency definition) 2) 6.7 6.4 6.4 GDP by expenditure (real) Private consumption expenditure 0.9 1.9 1.9 Machinery and Equipment 4.5 3.6 2.2 Construction 2.9 0.2 2.3 Domestic demand 1.3 1.6 2.3 Exports 4.0 5.4 3.2 Imports 3.7 5.7 4.8 External balance of goods and services (contribution to 0.4 0.2 -0.4 GDP growth) 3) Total gross wages and salaries per employee 2.7 2.9 2.6 1) Up to 2015 results of the Federal Statistical Office, National Accounts Status: January 2016 2) In relation to the total labor force 3) Absolute change (stocks/external balance) in per cent of pre-year GDP (= contribution to change in GDP) The pick-up in growth is likely to result in a clear improvement in corporate profits this year. Unit wage costs will mark a moderate rise. In terms of the overall economy, no inflationary tensions are expected. Low oil prices are resulting in a moderate development of the price level. There are no signs of deflationary tendencies for Germany. A central assumption for the projection is that the financial sector will remain stable and there will be no negative devel- 2 opments in the eurozone or the world economy which will cause a significant rise in uncer- tainty. 1.2 The energy transition in Germany continues The energy transition is the way into a secure, environmentally friendly, and economically successful future. At present, a third of the electricity comes from wind, solar and other re- newable sources. The output of harmful greenhouse gases was cut by almost 25% between 1990 and 2012. The energy transition has furthermore opened up important fields of business. New global markets have arisen in the wake of the expansion of renewable energy sources and efficient use of energy. By 2050, some 230,000 new, forward-looking jobs will be created by German enterprises especially in the renewables sector. Germany is fully on track with the schedule set out in a specific 10-Point energy agenda. Nevertheless, a number of key issues had to be settled, as there are important tasks ahead: Expanding the grid quickly and in a citi- zen-oriented way, setting up a viable electricity market, providing clear prospects for com- bined heat and power generation (CHP) and rigorously implementing climate mitigation tar- gets. Federal Government putting key policies in place for the energy transition - Mitigating climate change: The national climate target of cutting carbon emissions by 40% by 2020 remains in place. To achieve this, it is necessary to cut an additional 22 mt of CO 2 emissions by 2020, and therefore various options and their impact on companies and their employees (particularly in the electricity sector) have been discussed in detail. The 22 mt of CO 2 is to be attained by a combination of various measures. The alternative to introducing the "climate contribution" involves the following: Lignite power station units with a total capacity of 2.7 GW (or 13% of installed lignite capacity) are to be grad- ually shifted into a capacity reserve and then closed down after four years. In doing so, the contribution towards mitigating climate change and a socially and economically accepta- ble process of structural change will be carried on. Further carbon emission reductions are to be attained through the use of combined heat and power (CHP), the introduction of ef- ficiency measures in buildings, the municipalities and industry, and through energy con- servation in the railway sector. - The electricity market and energy security: Germany aims at making the electricity market fit for the energy transition. the fundamental decision in favour of an electricity market 2.0 guarantees security of supply at the lowest possible costs. This draft legislation on the continued development of Electricity Market paves the way for a viable electricity market 2.0 and is the outcome of broad-based discussions, many scientific studies and the Green and White Papers that are the product of a wide-ranging consultation process. 3 - Capacity reserve as additional security: Taking a "belt and braces approach", the capacity reserve safeguards the electricity market 2.0. Several power stations with a total capacity of up to 5% of the annual peak load (i.e. approx. 4.4 gigawatts) will be ready to step in. The reserve serves to absorb any unpredictable, extraordinary extreme situations. After all, security of supply is of key significance for an industrialized country like Germany. - Co-generation of heat and power: CHP plants are very efficient and are making an im- portant contribution to the energy transition. Many CHP installations run by public utili- ties are barely profitable due to the low price of electricity on the exchange. The Federal Government will help the existing installations whose economic viability is at risk, pro- mote the conversion from coal-fired to gas-fired CHP, moderately increase the funding rates for new installations and thus giving CHP a prospect for the future without the costs running out of control. - Grid expansion: The expansion of the power grid is the bottleneck holding back the ener- gy transition. Many people are concerned about the building of new overhead powerlines. We take these concerns very seriously. From now on, underground cables will be given priority over overhead powerlines in the case of new DC routes. This will not change the fundamental need to build new powerlines, particularly from the north to the south. The reason is that cheap renewables-based electricity from the north also needs to get through to the consumers in the south of Germany. - Nuclear energy provisions: The energy utilities are responsible for bearing the costs of decommissioning the nuclear power plants and disposing of the radioactive waste. It is decisive to ensure that they remain capable of this in future (after having carried out a stress test to assess the financial reserves and the adoption of legislation to counteract any possible reductions in the assets held to meet liabilities, the final step was to set up the Commission to Review the Financing for the Phase-out of Nuclear Energy).
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