What steps can prevent a downturn driven by climate impacts? This World Economic Forum Annual Meeting 2026 session explores economic risks tied to environmental change and potential pathways to sustainable recovery.
At Davos 2026, panelists argued that the world faces not an “energy transition recession” but a “climate policy recession,” driven by weak governance and vested interests. Al Gore blamed fossil fuel capture: “The fossil fuel industry is significantly better at capturing politicians than at capturing emissions.” Yet market momentum looks durable: 93% of new global power capacity added last year was renewable, and battery costs are falling fast. Germany’s environment minister Carsten Schneider emphasized political durability depends on fairness: “Who pays the bill?” His approach targets subsidies toward middle and lower incomes (e.g., EV support for households under €40,000) while pricing carbon. Business leaders pressed for a “narrative of hope” grounded in competitiveness; Ester Baiget noted the green economy is already “a 5 trillion economy,” growing twice as fast as legacy sectors. Agriculture emerged as a pivotal lever: Jai Shroff argued for simple, scalable incentives that reward farmers for practice changes, not paperwork, warning consultants can out-earn farmers. Zhang Lei highlighted AI-driven electricity demand and positioned renewables as the only “infinite and inexpensive” foundation, including green ammonia from deserts. Elizabeth Thurbon framed the transition as a “national security multiplier,” but stressed legitimacy requires equitable benefits via community and indigenous ownership and affordability. The session closed with Gore’s reminder: “Political will is itself a renewable resource.”
Short period of time. So we're all going to have to be very brief. The the forum has chosen the title for this session. How do we avoid a climate recession? And I'll start off very briefly by saying, in my opinion, I see a climate policy recession, but not a recession in the energy transition, because policy is controlled by governments, and too many governments are now controlled by special interests. That may sound like a radical diagnosis, but it's actually the truth of what we're facing, because the fossil fuel industry is significantly better at capturing politicians than at capturing emissions. And they've worked at it very hard for more than a century. And so the, the policy, has been a bit schizophrenic in some countries, including my own, unfortunately with, you know, going forward and what I regard as the right direction, and then all of a sudden screeching on the brakes and trying to satisfy the fossil fuel industry by going back, to the dirty fossil fuels. But in the real world, the advantages of renewable energy have become so obvious everywhere around the world. And the consequences of the climate crisis. You know, last year, 61% of the landmass of the entire Earth experienced at least one month of extreme drought. My country is in a rare winter drought, right now, massive fires in Chile this week. The tens of thousands displaced worries in Australia about another Black Saturday event, in southern Australia. And we've seen, 300,000 people displaced from their homes two days ago in Mozambique. Three days ago, 50,000 displaced in South Africa. In my country, we had 12 once in a thousand year downpours in a three day period last year. Just a shocking in my home state, Tennessee, and even more in neighboring North Carolina and parts of Georgia. We had such a downpour that in four days there was as much rainfall as would fall over the largest waterfall in two and a half years. It's been quite dramatic in the Los Angeles fires and the list goes on. But on the technology last year, if you look at all the new renewable, all of the new electricity generation installed worldwide, 93% of it was was renewable. And the only thing coming down faster in price than solar panels is utility scale batteries, because the production is doubling every year. So we don't have a recession in the movement toward this energy transition, in my opinion. But but we do appear in many countries, not all, climate policy recession. So, let's go around the room and, Minister Schneider, I'll go to you first. How do you see it?
I would agree, I agree, it depends on the political decision making process. Do you have a support by your constituents or not? In Europe we do. We've changed the Or. We passed a law in November to reduce our carbon emissions by 90% to 2040. This is now the law, voted in the European Parliament and the national governments. And in Germany we are on track. I will propose our climate package for the next five years. In two months. And I would be so close to fill the gap to reduce it by 65% to 1990. And, it's, as you know, Germany, we are we have a stagnation economically. But not in the clean tech. Clean tech is rising by or is increasing by 5% the year. And I would like to support this by regulatory framework. And last thing I would add, coming back to democracies, you need the voters in favor of that. And that's the question of distribution. Who pays the bill? Who pays the bill for the energy? Who pays the bill especially for, implementing the policies? And I changed the mix a bit. Not the elite 10% gets the subsidies. The the the upper 50% gets the subsidies. For instance, if you buy an electric car. I introduced a new program on Monday that you could get up to €6,000 if you have below €40,000. That means, having the decision to to drive an electric car is not only from a moral point of view, or even from a social distinctive point of view driving a Tesla, which is not very popular in Germany right now. Well, you have to know what to do. But it's a reasonable question. And, so I'm a social Democrat. Always look on the distributional questions, too. Maybe it was too less than last year on the climate issue.
Well, thank you very much, Esther Borge from the private sector. And you are co-chair of the the World Economic Forum's, Climate Climate Leaders Alliance. How do you see this question?
I, I see the need of opposing the value of pausing and decoupling noise from facts. And I, I would encourage each of us to bring a narrative that shows truly what's happening and a narrative of hope, a narrative that brings real facts that are happening today. Today, the green economy is already a 5 trillion economy, and it's growing twice as fast as the revenues of the past. It is competitive. It is replacing. It is bringing resilience. It is bringing optionality. We have to move from a confrontation to a transition to an evolution faster to the future, with solutions that already exist and are already competitive. You mentioned the CEO Climate Alliance as a group of a little bit more than 100 CEOs, where collectively represent a like a $4 trillion and more than 12 million employees. We have in the last years reduced more than 10% of CO2 emissions. And at the same time increase the revenue. 20% are this dilemma of climate and prosperity. It's not their business mark. Is climate smart, long term business success. It is in respect with the planet. There are two sides of the same coin, and we just have to share that and show that we are moving faster to that future. Of course we say thank you to the past, which is fossil. We say thank you, we keep moving on and we embrace the answers of the future. I am privileged to be part of a company who are stronger enabler of those answers of the future. We bring enzymes, microbes, protein solutions that they transform the way that we produce and and the food that we eat healthier, decoupling fossil, bringing biofuels, bringing alternatives to fertilizers, changing the foods that we eat, replacing unwanted goods, increasing yields, efficiencies, all that with solutions that they are in respect with the planetary boundaries competitively also, and most importantly, creating jobs.
Yes.
Let's not forget that the solutions of the future, they are homegrown solutions based on local jobs that they drive resilience, wealth and on top they respect with the planet. So I think we have a narrative crisis because we have not explained it, that it's not only about the climate, it is about growth, it's about prosperity, it's about resilience, and that those solutions are already competitive and that they exist.
Yeah. The Oxford Policy Review has a very well respected peer reviewed study from some years ago, showing that there are three times as many jobs created for each dollar spent in the renewable economy compared to the fossil economy. Josh Roth, you focus on the agriculture sector. How do you how do you see this?
Yeah, I think it's a very exciting time. And we feel that, you know, companies like us are investing in, technology to improve farmer resilience. And the outcome of farmer resilience is, is really, water management, soil management and, you know, those sort of things which really impact, the farmers lives, stressful conditions, heat, stress, etc.. And, you know, I'm so happy that the minister talked about, you know, rewarding ev, ev car buyers. But, you know, what is, an opportunity for, for the world is to, to reward farmers, right? So today, 25% of, greenhouse gases is from, from agriculture, but we do not have, manage or executable, system to reward farmers. Now, we believe that every farmer can reduce 5%, improve his efficiency on carbon by 5%. But our reward system for that is so complex that two years down, the farmers say, forget it. I'm not I'm not playing this game. Because somebody the regulation there's too many consultants. They're making more money than the farmer. I think we need to have a very simple reward system, get it 75% right. Give farmers the, the the reward change for change in behavior. Farmers take huge risks with climate change, you know, water, pest disease, commodity prices. Now you're telling them change practices and say, I'm not going to pay you anything for that. And, and I believe a very small reward system can give you massive, massive impact. Much more than I believe anything, EVs can do or, many other incentives. The the world is, is, rewarding other industrial sectors. A car buyer is much richer than a small farmer in Africa or India. Two acres, five acres. You expecting him to change? But you don't want to incentivize. So I think it's not only about financial incentive reward. Recognition. By by by the, you know, labeling or whatever. And I believe that the pressure on the, agriculture economy to get 100% accurate data in a very volatile world is is unfair. And I think we need to create a much more easier system. You don't need to give him millions of dollars. You need to give him 2% more. 1% more. I think you'll see a massive transition. And what we are doing as a, as a corporate is giving them, microinsurance if there is a weather impact, he's trying new technology. Can we reward him by instant insurance payment? If there is. In the month of June, he was expecting 100ml of rain. He doesn't get anything or he gets 300. He loses a lot of fertilizer. You know, the nitration sort of dissipates into the groundwater he needs to fertilize. So we give him a very small amount of reward. So those are the sort of things which I think we need to do.
Thank you. And thank you for what you're doing. Just to briefly put this in context for a lot of people don't understand the connection, haven't seen the connection between farming and the climate crisis. There's three times as much carbon in the topsoils of the world as in all the trees and vegetation put together, but massive over plowing and techniques that don't respect the integrity of the soil, which is the actually the secret to farming, have resulted in the outgassing of all of that carbon. Not until 50 years ago that farming and land conversion was was no longer the number one source of CO2 in the atmosphere. This needs to change and we'll come back to you. Lady Zhang, you've inspired a lot of people with your large scale vision of producing carbon free, renewable energy and some of the deserts of the world. How do you see this climate policy recession?
Right. I think it's like climate climate policy sentiment is no. So there are some like swings. But the fundamental physics actually is improving. As you said. No, the energy storage is demand is increasing significantly. Why? Because the price of energy storage has been dropped almost 80% in the last three years. So which is enabled lots of opportunity for wind and solar to improve a much bigger penetration. So today my feeling is we are so lucky to have renewable energy to be ready. Why we are at the doorsteps of great prosperity because of AI. But people underestimate the demand of energy AI is going to use. AI is going to be the largest energy consumer. Just people cannot figure out before steam engine invent. So people don't know our energy consumption is going to increase 100% 100 times. So AI will have a similar impact to our energy demand. So then think about so the boundary for AI is going to the boundary of energy cost. So we need such a long duration lasting energy foundation for our great prosperity for up coming years 50 years, 100 years. Now we see probably we are going to increase ten times more electricity demand in the next 50 years. So we cannot build our house in the moving sand with a finite energy resources from fossil fuel for our great future. 100 years coming up, we have to create infinite and inexpensive energy resources which is renewable energy. Never depleted inexpensive. So we are so great. Renewable energy is there is much competitiveness. It's approaching zero marginal cost. So I feel so lucky.
Yeah. A friend of mine who likes to tell jokes in my home state of Tennessee said, you know, if God had intended us to have limitless, cheap, clean energy, he would have put a giant fusion reactor in the sky. Okay.
Yes.
Distributing it everywhere. An advisor to the king of Saudi Arabia decades ago said to his sovereign, he said, remember, the Stone age didn't end because of a shortage of stones. It ended because something better came along. Yes. So we're very fortunate to have Professor Liz Thurman from the University of New South Wales. Thank you for making that 27 hour journey here to Davos. And you're an expert on on climate policy. And you focus really on Northeast Asia but also worldwide. So you're an expert. Tell us what do you feel about this.
Look, I would just echo what my good colleagues have said already and that there is an enormous good news story to be told. The renewable energy transition isn't just happening. It's irreversible now, and it's irreversible because two thirds of global investment into energy at the moment is going into clean energy, mostly renewables. And that's because renewables are the cheapest form of electricity in almost every circumstance now. So that's not going to change. That's irreversible. And it's also irreversible because this transition is being driven largely by Chinese investment. And the Chinese government understands something really important. And that is that the energy transition is a massive national security multiplier. It boosts economic security, it boosts energy security. It boosts environmental security. It boosts social security through jobs and geostrategic security. So China's not going to change its path. And so we will see that momentum continue. But there's another reality, which is that we are in a really messy, messy phase of the transition. And that messiness is due largely to poor governance, especially across a lot of Western countries.
Poor governance.
Poor governance.
Do you see any signs of that in the world?
I do. I think that let me see. But but so you raise the point of fossil fuel capture. I think that's a real problem. But also we're just not ensuring that the fruits of the transition are shared widely enough and that people understand that there is the benefit. So this is a huge challenge for governments. If we want to rebuild the social and political consensus, we need to make sure that we share the fruits and that this is a story about the energy transition being that massive national security multiplier. That's a message that conservative governments can get behind, I think, as well. So thinking about how you frame the transition and the imperative will go a lot further, a lot faster.
Yeah. And you have China, which you focused on in some of your comments. It's interesting that last year China exported to the rest of the world, more green technology by dollar value by 50%, 50% more exports of clean technology than all of the exports of fossil fuels from the United States to the rest of the world. They have wisely chosen to invest in an appreciating asset they have while in the United States, we've chosen to hang on to a depreciating asset because, enough of the policymakers in the US are under the thumb of the fossil fuel polluters. And when when they say jump, the politicians say, oh, yes, sir, how high? What can we do this?
This is true. And I think, you know, we do hear a lot of arguments about China's overcapacity, in renewable products. And, it's clear that a lot of companies around the world are struggling to come to terms with China's competitive advantage. But the reality is, is that from a climate perspective, there is no such thing as overcapacity when it comes to producing renewable energy equipment and to rolling it out as fast as possible. And so in that sense, China has done an enormous amount to address the climate crisis. China has effectively peaked emissions. It looks like six years ahead of its, of its its targets. This is a good news story. I'm not that's not to say that there aren't problems. It's not to say that there aren't, needs for adaptation and adjustment on behalf of all countries, but this is a story that really needs to be told.
And to focus on the energy security dimension of it. Did you have your hand up? Yeah. Please go ahead.
Build on this because it's, it's amazing what's happening on China, on green electricity. But I would like us to look for what's happening also everywhere else. It's not only China. This is true. And it's about multiple sources of optionality. Yes, fossil fuels has maybe less value added but still present and are going to be here for a while. But the ones that are growing fastest green electricity from solar for from from from wind storage, bio based solutions, solutions that come from good carbons not the carbons under the ground. The carbons that they were from solar capture but by the plants biomass that they are transformed into biofuels, that they decouple the dependency on fossil. And we see India massively moving into this space. It moved from zero to 5 to 10, 15, 20% of the gasoline demand. Consumption in India is today with bio based sources, and that's because they realize that they need for national security an alternative, which is not going to be the oil that they have today as a feedstock and they want to decouple. That's also because they realize that that generates local jobs. It gives an income for the farmers, it gives security of demand. It gives alternative to the volatility of other sources, and it drives local jobs downstream. For every plant you build, there is three, four, five jobs created upstream and downstream. The value chain, right. It's resilience. It's ductility, and it's competitive. And we see it in China. We see it in India. We see it in Brazil. We see Japan moving into bio based economy. We see it in us to biofuels are 10% of the.
We see this transition also in places like Pakistan where the cheap Chinese solar panels are being bought up so quickly. We've seen the addition of off grid solar to an extent that's more than 50% of what's on the grid. And and now this sounds like the punchline in a joke where people walk into a bar. But it's actually true that in most of Pakistan now, a common bride's dowry is three panels and an inverter. That's actually happening. We've seen a huge surge of solar installation in Nigeria, in Kenya, in in Zambia. Ethiopia has just passed a ban on new, internal combustion engine vehicles. Many of many of these developing countries are now seeing the benefits. And there's a security dimension as well. In in Germany, after the sadistic invasion of Ukraine by Russia, one of your officials called the renewable energy freedom energy. Is that still a common view?
He passed the job, but still the common view.
Yeah.
It was a liberal, but it's still a common view. But we we the one dependency that we had with Russian gas, 60% of our gas come from Russia is now what the LNG means. It's from us 92%. The actual figure comes from us. We have pipeline gas from Norway and other European countries too. So we still have a dependency. And for me, in my speeches, when I try to convince MPs or the industry, the trade unions, the people I argue with independence, resilience and independence and, we are a country that has not many resources that we have to do a lot of recycling more than we did until now. And second is produce the energy in Germany with wind, solar a bit bio, not so much because it's not as efficient as solar is. And I need the soil for, for, for nature, for, for, for products, for nutrition and so on. And more forests, to be honest. So I'm a bit on that point. Yeah. Yeah. But it's not as efficient as, windmills or solar panels. And I don't want to have deforestation in favor of biomass. Just to make that point clear. Definitely. And, yeah, that's what I, what I wanted to make. The point is coming back come last decade was the discussion about, driven by, a bit of a moral point of view, which is. Okay, pathetic. Now, I would drive it from a resilient point of view and argue towards, towards even to our industry. That has to change. We can't stay. The Russian Times won't come back with cheap gas and products and, from from China and then the sell it to the market because in the clean tech, area, China is getting the market and they are better in some battery storage and they are better than the Germans want are. And we need more engineering at this point.
Thank you. Jai, you wanted to get into.
Yeah. I just wanted to say that, you know, this, you know what we were talking about? Biofuels. You know what? What's happening in India is about 12 million hectares of corn. Acres were producing about two, two and a half, even less than two tonnes a hectare. But because of the demand and the cash flow the biofuels is creating, we're already up to three tons, three and a half tons. And we believe that 4 or 5 years from now, the same amount of hectares will produce almost five tonnes hectare. That means we will go from 42 million tonnes of corn to about 60 to 70 million tonnes of corn, just from the same acres, because we don't believe the weather allows that. So actually in developing countries, this allows farmers to use better seeds, better technology, because they're seeing the cash flow and then they want to invest. So so while, maybe the case in Germany, but I think in other developing countries, the second income source or second buyer, just not food, the fuel buyers are creating investment in technology for farmers, which is driving productivity. And, you know, with 1.4 billion people eating more protein, we need agriculture. Productivity and food will always get a priority in in case food prices go up. People will always stop biofuels and supply food. So that fear, is is is probably misplaced.
But the role of policy which we're discussing here is crucial in agriculture. Absolutely. As well. In, in the US, the largest source of government subsidies to farmers is in a program called crop insurance. The title is a bit misleading, but in order to qualify for these subsidies, farmers basically have to, to assure the government that they are not going to engage in regenerative agriculture because the incentives have been to produce as much as possible, as quickly as possible, fencerow to fencerow instead of taking care of the productivity of the soil and not depleting its vitality. So we need policies that, in recognition of the fact that governments around the world typically do subsidize farming, but don't subsidize them in ways that incentivize them to go in the wrong direction, but incentivize them to go in the in the right direction. That's your point, isn't it?
Absolutely. And you know, the amount of income which we were spending maybe $20 billion a year on importing the incremental fuel will go to small farmers. Now, that will get it will just help the economy dramatically in terms of investment, cash flows for these farmers.
And and the magnitude of this opportunity, the dean of soil scientists around the world, Ratan Lal at Ohio State University, winner of the World Food Prize. He and his colleagues at a peer reviewed study showing the technical potential for sequestering carbon in Topsoils is 156 parts per million, which is basically the entire difference between pre-industrial times. And now the realistic possibility is not that high, but it may be the biggest tool in the toolkit. And I want to come to you again. Leisegang. Tell us about your idea in the Gobi Desert. It technically the, the, the expansive view is you could actually provide renewable electricity to all of Asia from solar and wind and and batteries from the Gobi desert. Is that your vision?
Yes. More than providing green electricity is providing green molecules, the meshing, the productivity of soil actually is limited by the the fertile fertilizer. So then we actually we are creating green fertilizer, actually green ammonia in the Gobi Desert. Then this could be shipped to India, around the world, not only electricity. And today what we are achieving, we are achieving achieving cost parity for green ammonia with green. So this is, I think, a truly breakthrough. We are building the largest green ammonia project, 1.5 million tons in the Gobi Desert, with 100% renewable energy, mainly wind, plus sometime solar storage and with electrolyzer ammonia synthesis with AI orchestration. So this is going to be a new phenomenon. We think we are going to turn the Gobi Desert into the big green oil field. And this green oil is going to from Sahara, from Australia, desert in the Mongolia, Gobi shipping, the green oil around the world. And our next phase by 2028, we are going to make the green ammonia 10% below the grid. So we believe the Gobi is not a place useless. It's a place of abundance.
So it's an inspiring vision. And we've seen some business leaders in Australia offer the same kind of idea from the northern territories where massive solar fields are being installed in order to ship green electrons, up to Singapore and then to Southeast Asia. This is a realistic possibility.
Look, there are so many realistic possibilities in Australia that it's kind of mind blowing. You know, if you think about just one aspect at the moment, Australia, you know, we're one of the world's largest fossil fuel exporters. We also export a lot of iron ore, which is used in really dirty manufacturing. And iron ore is our largest export. But if we actually process the iron ore onshore using renewable energy, we can triple the value of our existing iron ore exports.
By largest iron ore.
Iron.
Your largest iron miner, Andrew Forrest, is one of the leading advocates of this energy transition.
He is absolutely. But, you know, there's a real challenge for Australia because, you know, we're not China and we're not the states. You know, we can't afford the trillion dollar subsidies and the expenditures for the government. So our government needs to be really smart in its statecraft, in its green energy statecraft. The question for a lot of us middle powers is how do we get the government using taxpayers, funding taxpayer funds in an effective and efficient way as possible? So, for example, with green iron, the biggest obstacle facing green iron producers at the moment is lack of demand, bankable demand. Basically, there's a green premium on green iron at the moment. So in Australia we're looking at using the government's, creditworthiness as an off taker to issue demand contracts for green iron. And then that that just the commitment from the government allows the producer then to raise funds at a really good rate for their project. And then you say, well, what, you don't want the government then lumped with all this expensive green iron. So the, the idea is that you would then separate the green iron from its environmental attributes, sell the iron into regular markets at regular prices without the green premium, and then you can create a clean commodity certificate with the environmental attribute that you can sell. And then the government actually earns the money back for supporting industry. So I think these kinds of really clever targeted interventions that are middle power appropriate, you know, smaller government appropriate are really, really vital.
But we haven't seen a shift in this policy, partly because of what you labeled poor, poor governance in many places around the world. And many advocates are saying the single biggest change in climate policy that would help matters is to stop subsidizing fossil fuels at the massive amounts that they're subsidized. Now, it is absurd that taxpayers around the world are being forced to subsidize the destruction of humanity's future. If we just got rid of all the subsidies for fossil fuels, we'd be better off. You agree, don't you?
I absolutely agree, I agree 100%, but this speaks back to the problem of governance. And, you know, we can't just govern the energy transition to boost energy security or economic security or environmental security.
Or job creation.
Or job creation. We have to have an integrated approach to governance. We call that green energy statecraft. To think cleverly about how you boost all of those security simultaneously. It's a huge challenge, but it's a massive opportunity.
So I'm going to open it up to questions from our audience here in just a moment. But before I do that, I want to go around one more time briefly with short comments based on what you've heard. What else would you like to add, Minister?
What I want to.
Hear.
I would, I don't, I disagree, I want to make one point clear that not everything that is green is good. And I disagree with you on the farming sector. And the policy in Germany is a different one. We we tax fossil fuel if you use the CO2, and it we are rising prices on, on gas and oil and the farming. I need the farmers to to reinvent peatlands. I need the peatlands, for, for storage carbon. And I need an additional of a rising world, more people to feed the world and not to feed the tanks. So I'm totally clear on that point. Green farming. I'm not a friend of that. I don't want to have incentives. I want to have incentives for farmers who storage CO2, for instance, with peatlands, and to, to keep the water in, in the area.
So we talked about this and I did yesterday or day before yesterday. I actually favor, incentives for farmers based on the storage of carbon in the soil and better monitoring and assessment. Michigan State University has what they call a multi-model ensemble. Bruno Basso and others. You say that's difficult and you want to subsidize behavior change instead of carbon storage. So there is a disagreement here. You want to respond?
Yeah. I think, you know, Minister, I completely agree. In Germany, where farmer productivity is very high, farmers are wealthy. The yields are close to the yield potential of the seed and the soil. But in India, where yield potential is ten times a hectare, farmers are producing two and a half tons a hectare. They what drives that incentive is offtake the problem in Africa. Small farmers in a landlocked country, the minute they produce ten tons, they sell everything. The minute they produce 20 tons, the prices collapse because there is no buyer. So when you have a secondary buyer for the for the grain, for an alternative use, which is actually these countries are spending billions of dollars, importing fuel. Now this cash flow goes to the farmer. They can adopt, use better technology and and use better, you know, you can start now saying, why don't you follow? No. Till why don't you, use, focus on soil carbon? Because it actually helps you with your yield. So I think, you know, I don't disagree with you that, that that Germany may be not the issue, but globally, it's very important to incentivize farmers to produce more from the same land. Can you imagine if you produce ten tons, of of grain versus two and a half tons, the amount of deforestation which you are saving, because if you had to produce the same amount of grain to feed 1.4 billion people in India or or Africa, you would DeForest the rest of the land just to feed them. And nobody is going to start doing intermittent fasting and stop eating.
Esther, you wanted to jump into this?
I would like to bring in the thought of the power of the end.
The power of.
The end, adding, it's more than just one, one option. It's a continuum. And it is looking at how we can complement and overlap. And please, here, don't forget that amazing advancements in science and technology leading to competitive solutions and leading to stigmas of the past that we have broken through technology today. And here, I embrace the job of the business and the companies to bring that voice stronger and louder. The dilemma you're raising up today, it's not food versus full. It's feed food and full together. When you look at capturing the products from the farmers and then bringing bioethanol, there are byproducts from these bioethanol thanks to technology, thanks to the yeast and to the enzymes that we develop and the war with the also engineering and scaling up that today you can extract the ddgs on value added solutions for feeding cows. So suddenly it's not anymore from corn to bioethanol, it is bioethanol and ddgs for protein. And you can decrease your imports that Europe does to of ddgs into the region. And this is what many, many countries see. They see we driving local jobs, we bring in decoupling. We enabling fuel, we enabling national security. We enabling fit. And with the right policies that harmony is in place. And here's where we where we I think businesses we don't do a good job on speaking up and and showing what technology, science, competitiveness allows today and how we can decouple the stigmas of the past.
We're about to run out of time, and I want to go to the audience. Anybody have a question here? Himanshu Gupta, climate AI.
Thank you, sir. I want to go back.
To hold the mic closer. Go ahead.
I want to go back to the initial question that the Vice president raised. How do we avert or like, how do we prevent this policy recession from spreading around the world, especially in times where most of the governments are dealing with budget deficits and there are competing priorities, for example, spending on defense?
Professor, you're the expert on government policies on this matter around the world. What do you say to this?
Give me the easy question. Look, I think this is an excellent question, and it really speaks to the absolute urgency to build a social and political consensus for the transition. And the key to that is to make this an equitable transition from the outset. At the moment, we have a transition that's accelerating, but it's not an equitable transition. People aren't seeing the benefits in their everyday lives, or too many people aren't seeing the benefits in their everyday lives. There are huge risks. I would agree with the minister. Renewables depend a lot on extractive industries for their inputs. We have a risk of replicating a whole nother era of dangerous extractivism. We need to bake in the social benefits from the outset. We need to be looking at community ownership of renewable energy. We need to be looking at indigenous ownership of renewable energy. We need to be looking at energy affordability. And only that way can we keep that consensus for the transition and ensure that we move ahead as quickly as we need to to address the climate crisis.
Same question. Lee.
Yeah, I would take this opportunity to question to actually to correct some misunderstanding on the large scale Chinese renewable products. So actually so that's the solution for your question. If you think about Chinese renewable products, it is the productivity tools for you to build energy foundation. Then you are able to build a much competitive artificial intelligence training, much good valuable products manufacturing. Just imagine in industrial revolution, if some country offers you steam engine at a very low price, you are able to build a fantastic industrial system foundation. Then you are able to open so many factories, so Chinese renewable products is kind of misunderstood. Misunderstood. It's so cost competitive. They are not making too much money on that actually very thin margin. They are subsidized the global energy transition. So that's my view. So we are so lucky to have China provide such great products, which in past 20 years we see such 90% cost reduction. Without such products, we actually we don't have time to discuss about energy transition, to be honest.
Yeah. Good point.
May I. ask may I ask because I think it's a it's a perfect political question. You ask. And I come back to my statement from the beginning. It's a distributional question. What you are, what you are. The question you raised were right. I mean, we have these, expenditures for, defense. Germany has to invest more in defense, of course. And on the other hand, for the energy transition. And then you have what we are our choose is or our choice is to, subsidize now the lower incomes and have a pricing and subsidize not the bigger incomes or higher incomes. And we have a pricing for oil and gas and CO2. This is the European way. I hope we can stay on that because we have this ETS two. We postponed it for a year because of the election in Poland. And and the question if we will succeed will be if we can introduce it for a reasonable and affordable price for normal people.
So I regret to say we're out of time. We're close. This has been a fantastic discussion. Thank you all so much for participating. We have everything we need to solve this climate crisis. Some doubt we have sufficient political will, but I'll close by reminding everyone political will is itself a renewable resource. Thank you all for.