The global need for drastic reductions in CO2 emissions implies a major overhaul for industrial societies. We are on the verge of a “third industrial revolution”, an environment-driven phase of change with energy and resource efficiency at its center. This economic renewal will not be without implications for Germany’s economic structure. With the help of an indicator model, economists at Allianz Dresdner have examined which sectors are set to gain and which to lose from the climate protection drive. Moreover, full account is taken of all economic sectors providing a comprehensive insight into the repercussions of intensified climate protection for the whole German economy.

In a study entitled “Will unbundling energy companies generate more competition on the electricity market?” Allianz Dresdner Economic Research examines EU Commission proposals to separate transmission networks from the energy companies. Their conclusion: implementation of these proposals is not advisable at this juncture

In economic terms resolute climate protection will mean one of the largest overhauls the world economy has experienced to date. New materials, enhanced technologies, optimized production procedures and intelligent products must all contribute to solving global environment problems and curbing the consequences of climate change. Such a modernization drive would make sense even without the climate problem. Climate change is thus the motor for an economic renewal which would need to be tackled anyway.

At the beginning of 2005 the EU launched Europe-wide emission trading at the company level as a new climate protection instrument. This entails the allocation of a politically specified quota of emission allowances to companies who then trade them. This turns the atmospheric pollutants they discharge into an added factor of production, the cost of which they must take into account in their product planning. The operator of a plant must decide whether it is better off avoiding emissions or purchasing emission permits.

In the face of declining reserves of fossil fuels and the threat to the climate from the greenhouse effect, the use of solar energy is a pivotal element for a sustainable supply of energy. Even in Germany the average annual sunshine is sufficient to generate a substantial portion of electricity and heat from solar power using efficient solar plants. To tap the sun as an inex-haustible source of energy, all three solar technologies currently available – photovoltaics, solar thermal power plants and solar thermics – are essential options.

Since 1960 the global market for electronic components has risen by an average of well over 10 % a year, driven by rapid technological progress. In conjunction with the increased efficiency of electronic data processing and telecommunication services, the range of applications has also expanded.

The growth rates are astounding: in the past ten years the global market volume for medical technology is estimated to have risen nominally by almost 10 % a year, well above average. Despite a host of government regulations around the globe, innovation momentum is higher than in practically any other sector. Looking ahead, the backdrop is also propitious, with the world population rising steadily, prosperity increasing in both emerging and developing countries, and the ongoing ageing process among the population in the industrial countries.

Besides wind power and solar energy, biomass is becoming increasingly popular again as a renewable energy source. The possibilities of its energetic use are especially versatile: biomass is suitable not only for electricity and heat generation but also for producing biogenous fuels which can replace conventional fossil fuels. In 2005, a good 67 ½ % of end energy produced from renewable energies derived from biomass.

In the coming five years most households in Germany will be able to use digital TV and enjoy broadband internet access. The main advantages of digital technology lie in the new variety of programs and the interactive and individualized use of the television medium. In addition to broadcasting via antenna, cable or satellite a fourth option is coming into play: IPTV – the broadcasting of TV signals using the internet protocol (IP) on the basis of DSL technology. Telephone, internet and television bundled into one connection, rendering so-called “Triple Play” possible. To achieve this, mobile networks are also an option alongside TV cable net-works and traditional telephone networks are also an option.

In the eight years since the German telecommunications market was opened to competition in 1998, it has witnessed very dynamic development, with average annual sales growth just under 6½ %. By the end of the decade, however, we expect average annual growth to have retreated to 3 %. The continued decline in traditional fixed-line telephony and the difficulties currently being experienced on the mobile communications market, where it is proving impossible to sustain the sales increases of recent years in the face of imminent market saturation and price pressure from low-cost providers, will both contribute to curbing the dynamism. Nevertheless, mobile communications remains a growth market, benefiting from the increased popularity of cellular phones. The same applies to broadband-related business. The services that have been facilitated by VDSL (Triple Play) are, in particular, likely to keep market share losses in fixed-line services in check.

To illuminate the main reasons for the increase in electricity prices and identify ways of reducing them, we need to take a close look at three pivotal factors – network costs, government involvement and wholesale prices.

The short-term trend for manufacturers of electronic components is on the bleak side. Following the surprisingly strong boom in demand in 2004 there is now a growing threat of a slump. With demand shaky, we now see world-wide sales rising only moderately this year. And for 2006 we expect semi-conductor sales to actually drop by almost 10 %.

Rarely before have so many negative factors impinged on foreign travel as in 2003. The ongoing weak consumer climate in Germany, pressure on business travel budgets, the Iraq war, terrorism concerns, the respiratory disease SARS, new summer holiday scheme in Germany and not least the lovely domestic weather have combined to depress German spending on foreign travel. In our estimate total spending in 2003 is likely to have fallen by some 5.5 % to around EUR 52.5bn.