SPIEGEL INTERVIEW WITH BASF CEO JÜRGEN HAMBRECHT
'I Have a Problem with the Term Climate Change'Der Spiegel
June 27, 2007
SourceJürgen Hambrecht is CEO of the largest chemical company in the world, BASF. SPIEGEL spoke with him about German environmental policy, what to do about global warming, and how the 12th century wasn't all that bad.SPIEGEL: Mr. Hambrecht, to reduce the effects of climate change Environment Minister Sigmar Gabriel is calling for the "fundamental transformation of industrial society." Have you already embarked on this transformation at BASF, the world's largest chemical corporation?
Hambrecht: A corporation that competes internationally must change constantly, but in three dimensions, only one of which is environmental protection. Economic efficiency and social sustainability are also part of the mix. After all, I am responsible for 95,000 employees and their families.
SPIEGEL: There are, of course, conflicts among these three dimensions.
Hambrecht: Yes, but one thing is clear: I cannot reach the other objectives without economic success.
SPIEGEL: Is Gabriel's demand too one-sided, in your opinion?
Hambrecht: Mr. Gabriel is like a whirlwind. He chases the cloud across the land, but he doesn't really care where the wind is coming from, just that it blows strongly. What Mr. Gabriel is asking for is a pipe dream. I would like to know whether he even supports Germany as a site for industrial production. What does he want? The transformation of industry into a service economy? Then he should say so.
SPIEGEL: Will you give voice to this criticism at the next energy summit on July 3, when you and other corporate leaders will meet with German Chancellor Angela Merkel and other government officials?
Hambrecht: Of course. We cannot continue along the current trajectory. Everything is currently determined by environmental policy, but an energy policy worth its salt doesn't exist. Where do we stand on nuclear power? Will coal have a future in Germany? These are questions we must urgently discuss. Instead, politicians are constantly setting new, unrealistic goals.
SPIEGEL: Such as?
Hambrecht: Mr. Gabriel wants to increase annual growth in energy productivity from one to three percent.
SPIEGEL: What's wrong with that?
Hambrecht: Energy productivity must indeed be increased, but three percent is a completely unrealistic target.
SPIEGEL: How does the government arrive at three percent?
Hambrecht: By simple arithematic. The coalition agreement calls for doubling energy productivity in Germany from 1990 to 2020. In reality, however, it has only grown by 0.9 percent per year in recent years. This means that we would need three percent to reach the target, which is completely unrealistic. We're already on the cutting edge when it comes to efficiency, together with Japan.
SPIEGEL: Gabriel has presented an eight-point plain with which he claims the three percent goal is achievable.
Hambrecht: The plan is outrageous. For example, it calls for an "an increase in efficiency in transportation and an increase in the share of biofuels to 17 percent." The minister doesn't seem to know what he's talking about. A share of only 10 percent would require the use of up to a third of current agricultural acreage in Germany.
SPIEGEL: Brazil plans to grow plants for biodiesel on a large scale.
Hambrecht: None of this is as easy as it seems, and certainly not on a global scale. Growing plants to produce biofuels competes with food production and also requires a lot of energy and water. Either way, it won't be feasible without genetic engineering and genetically modified crops.
SPIEGEL: The use of biofuels is only one of eight points in Gabriel's program.
Hambrecht: The next one gets me even more fired up: "Reduction of emissions of other greenhouse gases, such as methane." Methane! Who produces methane? Cows, sheep and goats. If we could break Germany's entire livestock population of the habit of eating and digesting, we would save only 18 million tons, instead of the 40 million Mr. Gabriel wants. We shouldn't be dreaming. We need more candor!
SPIEGEL: You are considered one of Merkel's key advisors. What does she say about your allegations?
Hambrecht: We must help the chancellor at the energy summit. But more reasonable views are gradually taking hold -- finally. New scenarios are being calculated.
SPIEGEL: The chancellor portrays herself on the international stage as someone anxious to protect the climate. Shouldn't Germany be setting an example in this respect?
Hambrecht: Ambitious goals are a good thing, but we must be realistic. I am opposed to our going it alone as a country, which would be detrimental to our competitiveness.
SPIEGEL: The energy summit planned for the beginning of July is already expected to issue recommendations. What do you expect?
Hambrecht: All discrepancies must be discussed openly, and then we must agree on which initial conditions should go into the joint final analysis. It is only on this sort of joint basis that we can issue recommendations capable of enduring in the future.
SPIEGEL: And if you don't achieve this?
Hambrecht: Then certain individuals will probably no longer attend these meetings in the future.
SPIEGEL: Will you be one of them?
Hambrecht: It's possible.
SPIEGEL: You say that what the government is calling for is completely unrealistic. What is realistic?
Hambrecht: Realistic is what is doable without harming the economy. Otherwise we will be solving supposed problems by de-industrializing Germany. We are one of the few Western economies that still has a large, well-functioning system of industrial production. If politicians no longer want energy-intensive companies in Germany they should be honest about it.
SPIEGEL: No one wants to drive out industry. But why shouldn't there be other ways to increase energy efficiency?
Hambrecht: Industry has already done a great deal on its own in the past, including adherence to substantial voluntary obligations. And we will continue to do a lot in the future. But we have already moved far up the learning curve. Climate protection that doesn't make sense economically translates into the loss of jobs to other countries.
SPIEGEL: Does this mean that we have already lost the battle against climate change?
Hambrecht: We have to do more, of course. But I have a problem with the term "climate change." It's laden with fear. The climate is a highly complex system, and it has always changed. If there is one thing we cannot do, it is to allow ourselves to be scared and to seek emotional satisfaction in short-term campaigns.
SPIEGEL: Apparently you don't take the report by former World Bank chief economist Nicholas Stern seriously. He predicts that unless we take drastic steps today climate change will cause a global economic crisis worse than the Great Depression of the 1930s.
Hambrecht: That's fear mongering. There isn't really anything new in the report. There are processes of change in the climate that we still don't fully understand. This alone makes me believe that steps must be taken. But there should be some sense of proportion.
SPIEGEL: What do you envision?
Hambrecht: We need a global approach, most of all. Everyone has to participate, including the United States and the developing nations. Look at China, for example. Greenhouse gas emissions in China are growing by more than 300 million tons a year. This is more than everything Mr. Gabriel wants us to save by 2020. This should be enough to illustrate the relations. The atmosphere doesn't care where greenhouse gases come from.
SPIEGEL: Gabriel says: "The industrialized nations have used the atmosphere as a free garbage dump for decades. Now, through emissions reductions, they must make room for developing countries." Doesn't this make sense?
Hambrecht: It's an incredible simplification, and it would mean that we could no longer grow. If that's what Mr. Gabriel wants then he should say so.
SPIEGEL: The developing nations and emerging economies are telling the West: You were able to develop for decades without worrying about climate change. Now that we are catching up, you come along and tell us, from your high horse, how we should behave. Can't you understand that?
Hambrecht: Of course I can understand it, but that's the way to keep this discussion going ad infinitum. We must develop a different attitude toward conditions on this earth. Many academics believe that the 12th century was the most successful for people in Europe. It was also the century in which Europe was the warmest. But then came the "little ice age," which lasted until the 19th century and was a difficult time with many epidemics.
SPIEGEL: Are you saying the warmer, the better? In that case, why should we do anything at all?
Hambrecht: Because mankind continues to grow and more and more people want to share in the prosperity. We must conserve resources, not just oil and gas, but also water, corn and soy. If we do nothing, the struggle for resources will take on geopolitical forms that we don't want. That's why have to do something.
SPIEGEL: The German economy benefits from the measures that have been taken. Companies like BASF are global leaders in many environmental technologies.
Hambrecht: Certainly. If better insulation were installed in every house in Germany, we would already save 80 million tons of CO2. And think of countries like Russia, but also England and the United States, where they don't use any insulation or where insulation is very poor. The chemical industry has developed completely new materials for this purpose. There is a long list of innovations. In the future you'll be able to use organic luminous diodes in new kinds of luminous wallpaper, thereby saving electricity. Other future-oriented technologies with which energy can be saved include green genetic engineering and methods of storing hydrogen in small spaces, which we are studying. Eventually we'll have all of these things.
SPIEGEL: In other words, massive savings will be possible.
Hambrecht: There is certainly potential. But we will never achieve the three percent Mr. Gabriel wants to set as a goal. And when I hear charges that Germany invests a "mere $6.20" per capita in energy research, compared to Japan's $30, I say: We were the world leaders in nuclear engineering research, but now that's gone. Green genetic engineering is also heavily restricted in this country. It is disingenuous to cut off our own research while at the same time leveling accusations against industry.
SPIEGEL: There are more and more "green" investment products, and more and more funds place a premium on companies being environmentally friendly. Do you feel this sort of pressure?
Hambrecht: I approve of the idea of integrating sustainability into the appraisal of companies. But only a very small group of investors focuses mainly on things like environmental efficiency analyses.
SPIEGEL: Most are interested purely in quarterly results?
Hambrecht: Yes, as a company today you need economic success more than ever. Investors have full pockets. The world is full of money. You have to offer returns to secure a company's long-term existence.
SPIEGEL: It seems only a matter of time before financial investors will be launching takeover attempts against companies listed on the DAX. Do you already feel the hot breath of private equity and hedge funds on the back of your neck?
Hambrecht: No one has come close enough yet to scare me. But it is of course possible for a financial investor to set his sights on a world market leader like BASF.
SPIEGEL: Wouldn't BASF be an especially attractive target for asset stripping? Individual divisions, such as natural gas and petroleum producer Wintershall, could easily be spun off and sold.
Hambrecht: You'd have to ask the investors. But the companies that are most at risk are those with weak management, which is certainly not the case with our company. On the contrary, I don't believe a team exists that could manage BASF as well as we have.
SPIEGEL: Mr. Hambrecht, thank you for taking the time to speak with us.
Interview conducted by Sebastian Ramspeck and Armin Mahler.