 economics, which is part of the University of Toulouse-Capital, and is one of the leading centers for economics research in the world, having among its faculty the 2014 Nobel Prize Laureate Jean-Tirol. This event is being broadcast on Facebook and will be available on YouTube, and there are some participants joining in from Zoom. Let me start by introducing our three guests for this afternoon. My name is François Cabaret, on my right. He's an engineer and has held multiple positions at Airbus. He's currently the head of global market forecasts, and he will be sharing his own views on climate policy and what's new on the technology front. Welcome. Joining us from Potsdam in Germany, we have Ottmar Edenhofer on Zoom. Ottmar is an economist, has written extensively on climate change, has advised the German government and co-chaired a working group on climate change mitigation for the IPCC. He currently directs the Mercator Research Institute and Global Commons, and the Potsdam Institute for Climate Impact Research. And finally, on my left, we have Christian Golié, who is an economist, has also written extensively on climate change. He is also an active voice in the European public debate on climate change, is the author of Le Climat après la Fond du Moin, and he is the director of Toulouse School of Economics. We'll start with some questions for our speakers, and then we'll take questions from the audience and questions from Zoom as well. So people who are watching us from Zoom can type their questions on the chat, and they'll be read out loud in the auditorium. So Christian, if you don't mind, I'll start with you. So this year, the president of the commission has unveiled a package of legislative proposals called FIFT 455, which is a package to meet the 55% reductions in emissions, which is the goal of the European Commission. This package includes many provisions like a new trading scheme and a border adjustment tax for imports. So I'd like to get your view on your impressions of what are the hits and misses of this proposal by the European Commission. Thank you. Thank you very much, Alipio. Let me first say that 55% reduction by the year 2030 is a challenge. It's an enormous challenge, and I'm not sure that everybody understands that. So it's 55% compared to 1990. Over the last 30 years, the first 30 years of this 40 years time span, we did 22%. So we need to do basically double that in one turn of the time. So it's enormous. So if you also look at the other region of the world, Europe is a place where it seems that politicians take the issue seriously. My evaluation of the current situation on the wall is Europe, with this FIFT 455, if implemented and I will say a few words about my uncertainty associated to that, if this is implemented, I think this means that Europe takes the issue very seriously. So this FIFT 455 is ambitious, and it's a credible package going in the right direction. But we must realize that the FIFT 455 package also contains a lot of issues that will be conflictual in the next few months. So I'm globally pessimistic, in particular here in France, the issue is not simple, it's not very clear, it's not clear whether the French government will support the package or not. Let me say one thing, I think the commission should make clear that because we already committed on the 55%, it should be clear that any member state, which would be against one important package of the FIFT 455 package, that member should propose an alternative with the same impact on the mission. Otherwise, if you say, oh no, I don't like this, but you don't propose something else, which generates equivalent emission reduction, well, it's a simple game that we can imagine what will be the outcome. For example, the French government, right after the announcement by the commission on July the 14th, different member of the government said, you know, this second ETS, this second market for transport and residential, we don't like that. And when I asked them why you don't like that, they don't like that because we have the yellow vest movement. And so taxing fuel for transportation or heating is remain an issue, but it must be clear that any alternative will also be costly and even probably more costly than the pricing carbon. So let me focus on the main element of the package. I mean, you have many thousand pages for the package, so obviously in two minutes I cannot cover everything. Let me focus on the main dimension. So ETS once we will expand the current European training scheme, which is currently only about industry and electricity, we will expand that when partly transportation aviation. So they will expand that in one direction specifically because we switch from 40% to 55% reduction of obviously we need to speed the reduction. So we will reduce the commission will reduce the allowance distribution, the auctioning of allowances from 2.2% to 4.2% and there will be an extension to the maritime and aviation sector. I don't go into detail, the aviation is already there, but they get free allowances. So because there is this second element of the package, which is the carbon border adjustment, the idea is in order to fight carbon leakage and environmental dumping. Over the last 15 years, the commission offered free allowances to sectors that were the most sensitive to international competition, aviation is a perfect example, so they got free allowances. The idea is to replace those free allowances by taxing any goods and services that contains carbon or that generated carbon emission for their production. So that's a good idea and of course that's raised a lot of issues related to whether we will be able to account for those emissions that are outside the union. It's already quite complex to evaluate emissions inside the region, but how can we compute or estimate emissions from China, from a good produce in China, that may be quite difficult and challenging and therefore it will take 10 years to expand this carbon border adjustment mechanism. One difficulty I have with this ETS-1 is there is no mechanism for a price floor. One of the big things we have seen over the last 15 years of the system is there is a lot of volatility in the carbon price and therefore it's very hard for the private sector to make estimation what will be the cost in the future if I retain my current carbon intensive technology. And of course, when you examine the actions to reduce emissions today, the most important action are related to investment and investment with long maturities. So for example, if you decide to replace your car by an electric car, you will use this electric car for maybe 10 or 15 years and it's not the current price of carbon that matters for your decision. It's really the carbon prices are in 10 and 15 years from now that will trigger this decision to invest in your electric car. Same thing for most of the electricity sector, whether you will replace a coal electricity generated by coal, by a windmill. Of course, because this investment will last for 40 years, it's the price of carbon for the next 40 years that matters and if we have this such large uncertainty about what will be the future price, this economic transition, this psychological transition will be delayed because people will not dare to take that risk. And so this is completely inefficient. So we need to reduce the uncertainty related to the carbon price that is generated by market mechanisms rather than a tax. For a tax, it's easier to say we have a price, a tax of 60 euros today and it will grow by 4% for the next 20 per year for the next 20 years. That's if you are credible in Europe in that policy, that's easier. So the problem is there is no, the package do not contains anything to reduce uncertainty and that's, I feel, it's a big problem. So there is also this song on market that will be established. So economists have been strong in pushing the idea for a unique carbon price in Europe. Any emitters of CO2 should pay the same price because it generates the same damage. And so the Pigovian approach, in order to force people to internalize the consequence of their emission on welfare, they should pay for the damage. And so all emitters should pay the same price. And so the idea was before this announcement as well, let us expand the ETS system to include all emission. For different reasons, the Commission didn't want to do that. One of them is the current price on the ETS is very large, relatively large, is 60 euros per tonne of CO2. And so for many countries where there has not been any pricing of carbon in those sector, going from a price of zero to a price of 60 euros, it's a big deal. For France, it's not a big deal because we already have a carbon tax of 44 euros per tonne of CO2, it's still there in spite of the yellow vest movement. Remember, the Macron just froze the tax, so it's still there. And so we should, we would just switch from that tax to the European mechanism, it should not be too costly for the yellow vest in particular. But so the idea is to establish a second market. I understand the reason, political acceptability. The difficulty is the current proposal does not say anything about the conventions of the price. So for some time in Europe, we will have two prices, the price on the first ETS, the historical ETS and the price of carbon for the new system, covering transportation and residential. And keep in mind, it's quite a surprise. So for example, if I heat my house with electricity, I will be the price from the historical ETS. If I heat my house with the natural gas, I will pay the price of the new, of the other market. So that will introduce some inefficiency, of course. Yes, I'm done. No, thank you very much. So let's see if Otmar has a more positive view on the energy parts of 5th or 55th. Thanks for your criticism, Christian. So let me turn to you, Otmar, and talk about the energy aspect of this proposal. So one of the main parts of the energy legislative proposal is to increase the targets for renewables, right? So I'd like to know if you think that's the way to go and if you have also some critical thoughts about 5th or 55th in this regard. Yeah, thanks. Let me start with an observation. So we have now increasing gas prices in particular of the COVID. And unfortunately, the gas price is increasing much sharper than the coal price. So around the globe, we see now again what happened over the last 10 years, almost in most of the, in many, in many parts of the world, in particular in Southeast Asia, but also in Germany. And this is the Renaissance of coal. And this is something which is a big, big issue. And so to start on a positive note here on the European emission trading scheme, even if the cap, the emission cap, is well defined. So even the gas price, which increases sharper than the coal price, so will not lead to a Renaissance of coal again, because the CO2 price is then increasing and pushes coal out of the system. This is exactly what we see currently in the German market. We see because of 63 euros per ton CO2, it is no longer competitive to rely on coal. You phase out coal, we will rely more on gas. Of course, the soaring gas prices create temporary problems. So in Germany, we have to blame ourselves, because we haven't created enough sufficient buffer capacity for gas. This is something which was a failure, because in Germany, we are not very good in taking into account the security issues, the energy security issues. But in principle, this can be solved. And there is absolutely no reason to recommend to the politicians now to intervene into the emission market. And this is what is discussed around Europe, because of the increasing gas price. People are now discussing, we should intervene into the emission trading market. And I hope that the politicians can't resist to do this, because this would be a complete disaster. Now, I agree on most issues, and Christian has highlighted. But let me say two aspects here. Now, we have the first emission trading scheme, which consists of industry and the power sector. And the CO2 price is increasing, and this will lead to a transformation of the European energy system, by the way, not only in Germany, but also in Poland. Now, the commission has proposed a second emission trading scheme, and this resembles what we have done in Germany. We have introduced an upstream system, which is then fundamentally a trading scheme for transport and buildings. And these are two systems. And obviously, these two systems from a purely economic point of view are inefficient, because you have different prices. But the reason why we have two different systems is simply that industry and the power sector wouldn't agree to reduce the emissions according to cost efficiency. Cost efficiency would imply that the power and industry sector would have to reduce emissions by 80%. They will not accept this, neither in Germany, nor in the European level. But then we have, and I fully agree, we would need in the package a clear indication how the convergence process should look like. And I agree very much with Christian when he says we need a price flow. And this is, from my point of view, absolutely necessary, because if the commission wants to have two separate systems with two different prices, so then we need two different price flows, if this is not the case without the price floor, we will see immediately on the market a convergence of the price very quickly. And this is completely irrespective if you have two different systems from a legal point of view, because traders in the market will use the arbitrage. And if they expect that there will be a convergence of 2030, they will go on the market and then we will see a record convergence of the price. So the price floor, and this might be the unintended consequences of the EU proposal, we might see two price floors. But then again, it is absolutely crucial to have a convergence process. Now let me highlight one aspect why I'm so concerned when we would fail at the European level to implement a second ETS system. What is the alternative to the second ETS system? The alternative is what is called in this typical European acronyms, the European effort sharing regulation. The European effort sharing regulation functions as follows. All the member states have obligations to reduce the emissions. And if one member state fails, a member state can buy emissions by another state. There's not an emission trading scheme between among market agents like investors, like consumers. It's a trading scheme among governments. And this trading scheme among governments has absolutely no compliance mechanism because we have already such a system, but the prices on this market are completely hidden and they will not be transparent. And therefore the penalty is no transparent. I believe that the European effort sharing regulation has a very, very weak compliance mechanism. And this by no means an alternative to a well-defined emission cap, which is decreasing over time. So my proposition here is either we will have an implemented ETS too, and then we have at least an inefficient, but over time we could reduce the efficiency, but we have at least a reasonable compliance mechanism. If we get rid of the second ETS system, we will have no compliance mechanism at all, at least no credible one. And then I have real doubts that we will reduce emissions around minus 55% and not to mention the big goal in the end carbon neutrality by 2050. So in that sense, I hope that we will see a joint European effort to do this. And I fully agree with Christian, a member state who says, I do not like this part of the package. Please come up then with a better proposal, which has the same powerful for compliance. So in that sense, I see that ETS 1 and ETS 2 is essential. A second component in the 55 proposal is the social fund, which allows to compensate low income households. I think this is absolutely crucial. And I think Europe will not survive this gas crisis without this compensation mechanism. And the third component are large scale investment funds around Europe to undertake investments in the post COVID recovery. And I think this investment funds should be used to support technologies which have a potential for future cost reduction. And this could make the whole emission trading scheme over the time much more credible. So to conclude ETS 1, ETS 2 is essential. Work with the social fund and give the investments fund the right direction in the right direction via the implementation of a unique carbon price across all the sectors over time. Thank you very much, Otma, for your thoughts. You seem to converge a lot with Christian, especially with regard to the two ETS systems being coexisting. But let's now go to another aspect of fit for 55 with our third guests. This proposal has also some provisions for aviation and transportation as ambitious targets to zero emissions from cars by 2035. So can you give us your view about how the transportation sector are reacting is preparing for this? Yeah, thank you. You know, we are making airplanes, not cars. So I won't comment on cars. Think of your opinions. I'm not an economist. I'm an engineer by education. I'm trying to understand economics. Normally I fail so I hire people from TSC regularly and we hope to hire more. Again, so I'm not an economist, but I think with Airbus, I can illustrate how much a company and not just Airbus as a company, but the air-transport industry as an industry is now framed and shaped by environmental policies which is indeed becoming right at the core of our strategy and not just our long-term strategy but our day-to-day operation. First, I want to state that I mean, I have an Airbus, we have a moral obligation and a legal obligation toward the fight for climate. It's not just legal, it's also moral. I think Airbus has changed drastically in a matter of a decade and this is really into our DNA as we would say now. So we have this obligation but we also have a business concern which is basically if we don't do anything we would lose our license, our social license to operate. There is so much legitimate environmental pressure on the industry as a whole, in particular on the aviation sectors for good and bad reasons that if we don't show that we are acting and if we are not acting drastically, not in 10 or 20 years, but now, we would just lose our license to operate. So beyond the moral and legal obligation, we have an existential threat that is there and just for the sake, I mean, even if you put aside the moral obligation as a company driven by business, we would have to change. You might have heard about what is Airbus view about the different technological steps that we need to implement to reach what we call net zero by 2050. I will say a few things about that but indeed you might have heard that since a few years now we started collectively, not just Airbus, but the industry, we started to force our ambition to reach net zero by 2050. 2050 is when I was 20 years old, looking 30 years all the way was ridiculous for me, but now I'm getting older and 30 years starts to mean something, 30 years is, I will not say tomorrow, but when you think about industrial cycle and as well, policy cycle, I mean, fit for 50, 55 is what a 15 months process until the final adoption. So it's not an overnight process. So 30 years for an industrial company is midterm. It means that if we want to think about what we are going to produce and sell in 2035, 40, 50, we have to start now. Actually we are spending every year several hundred millions of euro just on research and development expenses so that we are able to build product into the market in the mid 30s that will be major enabler toward the net zero. So just to come back quickly on the fit for 55, first of all, globally Airbus is very happy with fit for 55 because it's pretty much aligned with our view or what we collectively need to do and because it's giving a legal framework to some very important pillar of the decarbonization strategy of Airbus. For instance, the sustainable aviation fuel and for instance, as well the ETS. What we are, if you allow me three minutes to explain a bit what is Airbus view on this. So we have a situation today where globally the air transport industry emits a little bit more than 2% of the CO2, 2.3, which is not huge if you compare it with other sector but which is significant and which anyway, we need to cut drastically. So we have different step into this effort. The first one is that today we have technologies that are available, which is basically the airplane we are producing here in Germany or in Blagnac, which allows to reduce carbon emission by give or take 20%. If you look at today's fleet, it's only about 12 or 13% of the aircraft that you might be flying from time to time that are from the latest generation. So there are still 88% of the aircraft that we can replace with much more fuel efficient It means as well that you quickly understand that something is about money. I mean, it's important as well to remind that airlines need to generate some cash flow, some free cash flow so they can invest into new aircraft that are going to bring to help the decarbonization of the industry. The next step for the coming decades, we have two avenues. First is there is a technological improvement. You might have heard about the hydrogen aircraft which we aim to bring to the market mid of the next decade. And the other big pillar is what is known as sustainable aviation fuel. And here I come back to fit for 55. It's really great that fit for 55 has set very clear ambition about the percentage of sustainable aviation fuel that needs to be used with different dates. Actually, we think the EU has been a little bit shy. We think we need to be more ambitious. And what's fascinating is that when you start to talk about sustainable aviation fuel, you need to understand that everything relies on abundant clean energy. So at the end, whether, I mean, whatever the angle you take to look at the problem, at the foundation, at the basis, you need clean energy in large quantity. We try as well to look beyond energy because for some of the fuel, you know, in sustainable aviation fuel, there is basically the biomass sustainable aviation fuel, which is a bit criticized because for biomass, it means that you need land surface, you need water and so on. There is another technology which I want to mention very quickly because it's very important. It is what we call synthetic fuel or e-fuel, which is a way to produce liquid fuel out of hydrogen and carbon directly capture from the atmosphere. So there are technological solutions. At the end, it's about available money to invest and a very good and forward-looking legal frame, which is what FIFT455 is bringing. So at the moment, we really upload to the FIFT455 and we hope that it can be a little bit more ambitious in some respect and maybe a little bit less ambitious in other respect that we are not very strong supporter of. But globally, it's very good for me. Sorry I've been long. No, that was perfect. And there was one optimistic voice about FIFT455. So we are now going to take questions from the audience and from Zoom, but before we start, we have a question for the audience. So we would ask you to answer a little survey, which is you have to go to www.menti.com and put this code and answer, according to you, what will be the main energy of a CO2 neutral future? And as you reply, the answers will start to pop up in the screen, but we can also start taking the questions from you if you have some. So maybe questions from Zoom. But then I have a specific question. So you mentioned about the biofuels. There is a provision, if I'm not mistaken, to have a 5% goal of biofuels in airplane field. Yeah, in FIFT455. Yeah, in FIFT455. And you seem to be very optimistic about the technological constraints, like how you can achieve that, so can you elaborate? Yeah, you're right. There is a provision. Again, I have a view that the whole industry needs to be a bit more ambitious than the provision, because we would potentially fall short about what's needed to decarbonize the industry. So yes, biomass fuel, they have a very bad repetition because 10 years ago or 15 years ago, it was about actually using some land in competition with food to produce biofuel for airplane. We move to different generation. Now, if we do biomass fuel, that would be from a waste and there should not be any competition. And anyway, we know again to come back to the moral obligation and the social pressure. We know that we should not and we could not compete with land resources that is used for food. I mean, I was traveling recently into a country I love, Ethiopia. And we had those discussions with some customers. And we talked about energy needed to produce synthetic fuel. I mean, if you know a little bit about Ethiopia, they have just built their first major hydraulic dam. So they are still some miles away from using their energy, their electricity to produce synthetic fuel. They need first to produce electricity to fulfill the basic needs of their people. So we have to be very careful about the potential competition. And again, I was referring water, synthetic fuel, actually use water. So we need to make sure that again, this is fair to everyone not competing to other basic needs. And at the end, we are very much aware that we need very big number in terms of clean energy. So what is now core at the thinking at Airbus is eventually how we make sure that there is sufficient clean energy for the world and then for aviation. So thank you, François. I think Christian would like to react to something. Well, maybe you may want first to comment on the outcome of the first question. But yes, just aviation is certainly the most difficult sector to decarbonize. It will certainly the last sector to decarbonize in reality because we clearly, I mean, you mentioned the biofuels, of course. And we know that biofuels are ever difficult in the particular competition with food production. But look, all renewable source of energy are currently with the bad advertisements. So look at wind electricity now in France, nobody wants that. Nuclear don't think about that. So we are in a very difficult situation. We know for sure that in the short run, if we want to be credible in Europe, we should start with eliminating coal from the electricity power because it costs something like 30 euros or 40 euros per ton of CO2 saved to switch from coal to natural gas. Natural gas is not the end of the story, of course, because it's also a carbonized source of energy. But compared to the incredible cost of removing carbon from aviation, I mean, it would make no sense to ask the aviation to do already something today when we don't, which will be, it would cost maybe 1,000 or 2,000 euros per ton of CO2 saved. It makes no sense. And at the same time, we need aviation. I mean, it's, I mean, transatlantic flight, we need that for, I mean, many, many professions, it's a necessity. So yes, it's very challenging. Thank you, Christian. So let me comment on the survey and go to Otmar. So our respondents seem to be very optimistic about solar as being the main energy solution for CO2 neutral future. Eight people for nuclear, eight for hydrogen, five for wind and only one believing that no carbon capture will solve the problem. So do you want to comment a bit on the survey and give your own take Otmar or even react to what Christian has just said about sector-specific targets? Yeah, so thanks. First of all, I very much agree on the importance of synthetic fuels. So we did the calculation and so the current price for producing synthetic fuels is roughly 500 euros per ton CO2. I'm not so pessimistic like Christian, but still 500 euros per ton CO2 is a very high price. We expect all the next two decades a decline in the costs. So we might end up so with 200 euros per ton CO2. And here I would say in the production of synthetic fuels, this is a good example where let's say contract for difference could work. We have basically the difference between the current CO2 price and the price in the ETS. This could be supported by the government in order to incentivize the development of these technologies. What I would like to highlight here and this is equally important because François mentioned this and this is direct air capture. I don't believe synthetic fuels, we can rely on biomass. Though this is not the potential, it's not sufficient. We need direct air capture. And we need direct air capture not only for synthetic fuels, we need direct air capture also to create negative emissions because not all the emissions can be reduced. Process emissions from industry is a good example. And therefore we need negative emissions. In order to achieve carbon neutrality by 2050 negative emission technologies are incredibly important. And the problem is that we need pilot projects for this. And we need investments now to do this because this technology should be available in the next two decades. And therefore we need a lot of R&D investment, a lot of pilot projects here. And this is an important component when we talk about carbon neutrality which means basically fundamentally a greenhouse gas neutrality. This is a net, which means net neutrality, net zero. This means that we need to a significant amount negative emissions. So this is another area where we need R&D where we need much more investment. So and I'm a little bit concerned that this involves then definitely also carbon capture and storage. I know that but I don't know exactly the situation in France but in Germany a carbon capture and storage is not very popular. Fortunately, I have to say that the Norwegians they basically will offer Europe their storage sites of course for a reasonable price. But this confirms that for all this pathway, this transformation pathway, we need indeed a cooperation among all the European member states. And but also we have to talk about technologies which are less popular than solar power and carbon capture and storage is an example. And we need carbon capture and storage not so much for postponing the phase out of coal. We need carbon capture for producing or be absorbed CO2 from the atmosphere. Otherwise greenhouse gas neutrality would be not feasible. Okay. Thank you. So let me come back to Christian for a sec. Let's just see. Are there questions from Zoom or yeah, okay. So why should society make the decision to allocate biofuels to certain some sectors and not to others? That's a very good question. Both of you again. Yeah. I mean, there is a lot of uncertainty about what will be the marginal abitement cost for different sector at different time. When you look at the model, the kind of model that Otmar and colleagues are doing in order to estimate what is the optimal road to the road net emission and what will be the marginal abitement cost for different sectors and different technologies. And we are, there are many bets in there. And when you compare the models across different groups of researchers who have tried to make that kind of competition, you see an enormous size of uncertainty. We don't know whether in 2050 we will ever, we will, a carbon price of 1000 euros per ton of CO2 or 100 euros per ton of CO2 will be necessary to get there. And so that's an illustration of the intensity of the uncertainty we face. Not only us, the planner, but much more the people who are doing the investment today. Okay, so this uncertainty is extreme. And Otmar presented a very nice paper this morning at the seminar on environmental economics on that issue, looking at how to incentivize people and investors to do this effort, whether it should be a future carbon price or whether it should be subsidies today. Well, those models are very interesting and we work on that. The point I want to make here again is, and that's related to the question. I realize that I'm quite far from answering that question at this stage, but so this uncertainty is clear. It's clear that aviation, given the context and the fact that you have to fly with the energy in order to attain the objective compared to an electric car where you can have a quite an heavy battery in your car and it's still be able to move. For aviation, it's not possible. And batteries are very, very, very heavy quite costly and on top of that, the quantity of energy you can transport with that battery by kilogram is much less than a kilogram of kerosene. So this, the technology can challenge this big. Hydrogen could be a solution. I'm surprised you didn't say a word about hydrogen, but we don't know. But clearly there is a lot of them and there are many sectors having in mind biofuels or biogas as a solution and clearly they will not be enough of such energy available from that technology to satisfy the supply. So clearly it will be difficult and of course those sectors that have the most difficulty to attain zero net emission will bet I mean, we'll get this source of energy at the large price and I think aviation is likely to be there. Would you like to react a bit to that? Yeah, maybe quickly for the question. The question is great. And for me, the answer is biomass based fuel that actually compete with food. It should not be allowed. It's a political decision. And I think it's both a moral and again legal obligation for all of us. But back to your, I mean, I like very much the question because I've got a live lead. I'm the father of three Z generation. So I have a very lively dinner every day at home and fight as I'm telling my kid that first point is become a vegetarian, which is actually the most efficient to fight climate change for all of us today. And then the question is, should we be forced to become vegetarian? That would be the most efficient legislative decision with almost an immediate effect one year. And so it's always a mix of individual behavior and political decision. Back to your question about aviation fuel, I think it's a political decision, but I think every day when we wake up in the morning, we should remind us what is the behavior I'm going to change today and then tomorrow for the climate question. But François, just to dig a little bit deeper, you seem to be overall positive about the targets for 55, but the idea of having restrictions like biofuel in airplane fuels, you don't seem to be so positive about that, right? And whereas the economists seem to be also a bit skeptical about the costs that this may have, like if aviation is really the sector that should be targeted. Now back to your point, you're right. I mean, aviation is very expensive to decarbonize. For instance, the electrical aircraft, I mean, electrical car is pretty easy. It's there. It's massively there. Electrical aircraft, so far, it works for very small aircraft, very short distance. Maybe in 10, 15 years, you can go from Toulouse to Narbonne for the weekend with electrical aircraft, but it's not there. And synthetic fuel, there are five to 10 times more expensive that fuel. So yes, it is probably the most technologically challenging sector to decarbonize. Yes, it is probably the more expensive. But again, because you are so much under the spotlight that, I mean, pragmatically, probably from an economist point of view, you would decarbonize, you would first switch off all the coal energy plant in Germany and then switch off the gas and so on. So it might be seen as non-rational and I can hear that. But again, for us, it's an existential threat. We need to change completely the way we operate. Otherwise, you will stop flying and you might be right to do so. So there is this fundamental issue to address for us. Okay. Do you like to add something to that? Yes, the price of carbon that will be necessary to attain zero net emission is a key question for most sector. Aviation is an example, but all other examples are still struggling about what's the intensity of the problem. Let me look at the special case of drivers. I mean, you and I, we have a car and we think about switching to electric car. So currently, the carbon tax is 44 euros per ton of CO2 that corresponds to 10 cents per liter. So that's the current price, that's the current delta price you pay for contributing and to incentivize you to reduce your emission. That's with 44 euros. If we go to 200 or 300 euros per ton of CO2 by the year 2030 to go to 55% reduction of CO2 globally, that's we think, I mean, we economists in France, we have a report by Alain Kine from that has been recried by the government that estimate this price of carbon around 300 euros per ton of CO2. So that would increase your liter of gasoline at the pump around something like 60, 70 cents per liter. So that gives you the idea of where we have to go. And compared to the current situation with the increase of the oil price on the international market or the price of natural gas on the market, on natural gas, we have seen the price multiplied by a factor of four. So 400% within the last six months or nine months. So the shock is much stronger. I mean, the increase in the price of natural gas or the increase in price of the gasoline than the pump has been much, much larger than what we have to do in order to get to zero emission by the year 2050. So we have in order to increase this price, we have 10 years or we have 30 years to go. So just to say this price, many economists say, oh, that's good to have an increase in those price of natural gas or the price of gasoline at the pump because that's incentivized people to reduce their emission without having to require a carbon price. The carbon price we have in mind is much smoother. We don't want to have such a shock. Carbon pricing would be much smoother. We will gradually increase the carbon price to get to incentivize people to reduce their emission. That's true for transportation by car. It should also be true for aviation. OK, Othmar, would you like to? So I think that we have an agreement among the panelists that carbon pricing is a good thing to do. The problem is, can investors and consumers trust that the politicians will stick either to the carbon budget or to the carbon price? And from my point of view, the whole debate, at least in Germany with environmental groups, boils down to the question, do we believe that there is a credible commitment for policymakers? Are policymakers capable to a credible commitment? If there is a credible commitment, so you see an increasing smooth carbon price and if you know that the carbon price is increasing, of course, you would invest then in synthetic fuels. You would invest in all these things. And Christian and myself would agree even on the risk premium. And we would have say, OK, there's a growth of 3%, then there is no problem because with 3% discount rate, it would be even currently in Germany profitable to switch from a combustion engine to an electric car. But if there is no credible commitment, the risk premium will increase from 3% to 6%. And then basically, there is no longer a profitable investment in electric cars. So in that sense, this is the crucial thing. And how can we solve this commitment problem? And I think this is at the core. And I understand what I understand that most people who oppose carbon pricing, and there are a lot of people who are opposing carbon pricing now, don't believe on this commitment device. They might express it in a different language. But this is the logic of the argument. And therefore, I think we need to think about this. And my proposal would be to delegate some of the task to be responsible. The decision about the available carbon budget is a political decision. To what extent low income household should be supported. This is a distributional issue. This should be taken by policymakers. But managing the carbon budget, introducing a minimum price, creating an options for negative emissions, this is something which a European climate or carbon bank could do. And I think this would be the way, because then the commitment would be much more credible. So that's basically my conclusion here. And this is the biggest challenge which is ahead of us. Thank you, Otmar. Let's just see if we have one quick question to finish. But otherwise, we will leave some concluding remarks to our speakers here. Maybe just to follow up on what Otmar was telling. Indeed, we need very clear legal framework, not just for the next registration, but for the next 30 years. And just a reminder that since the beginning, we have been talking about fee for 55, which is what 10% of the world population and maybe 50% of the emission. So we should not remain into our bubble. That's why I think the aviation industry relies on European policies, especially because European policies on this topic is really on the front line and somehow is setting standards, which I hope will spread. But as well for the aviation industry, it's as well not just about political support, but as well about collective decision across industry or the airline. You might have heard about two important associations, IATA and OSCE, which are basically the Staniqa, the Transparency, and those institutions which are worldwide have committed towards net zero. So it's not just in Europe, but it's as well across all continents, including in India and China. So whenever we are talking about technological solution or legal framework, we should not forget that it's a worldwide issue that we have to tackle. Well, first, thank you for the invitation. I mean, I'm very happy to see both Germany and France on the same line, not only economists here in the room, but most economists I meet and I know in France and in Germany agree on what's the policy instrument to realize the commitment made by the politicians to go to the net emission by the year 2050. It's also good to see that the most well-known corporation in Europe, Franco-German, Airbus, agreeing with the target and agreeing that they will contribute to the solution. How we will be able to do that? Nobody knows, nobody has an idea. But what will be, how the European economy looks like in 2050, fully decarbonized? But I'm happy to see we work on that. I'm very happy that we are contributing to the debate and we are supporting the FIT455, which is, again, it's a courageous and credible strategy to get there. And again, I'm happy to see that Europe is moving in that direction of providing a solution, providing a strategy. And I hope that in Glasgow next month, we will see other regions of the world doing something similar. I don't see that currently in the US, but I hope that the Biden administration will move. I heard recently that they could eventually decide to go for carbon pricing. Let's look at what will happen soon. Thank you so much, Christian. Othma, would you like to have some concluding words? I would say I don't want to come across as pessimistic. I see a lot of challenges. And I'm also happy to see that there is a lot of convergence, not only among professional economists, but also between industry. And I would even say that industry is much more progressive now than the policymakers. And industry is expecting from the policymakers a credible regulatory framework. And this is missing now. And I think I hope that the European debate on the two ETS will succeed in the end with the support of France and Germany here. So we have to join forces here. And when France and Germany join the forces here, I would be incredibly optimistic. Thank you so much. François, would you like to conclude with some? No, what you're describing is the Airbus history. This is where France and Germany, only a few years after the end of World War II, started to cooperate actively. Okay, there was the Charbonne L'Acier first, I think in 54, but rapidly after that Airbus came and just the anecdote is maybe if you visit the big Airbus factory in Hamburg, actually you see the Hangar where during World War II they were building the airplane to fight the French. And now we are building the same Airbus together on this factory. So it's quite of a, it's a nice symbol. Thank you very much. So it's good to conclude this event with a celebration of Franco-German friendship. Thank you. In English, yes. It's very European. So I'd like to thank very much our speakers, François Cabaret, Othma Edenhofer and Christian Golié. We can applaud them. And also the organizers of the event, and also the communications team of TSC and Franco-German Fortnite in Occitania. Have a nice evening, everyone. Thanks for the invitation. Thank you, Othma. That was very nice to spend the whole day with you. Thanks, Christian. It was great.