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Brussels to tinker with tools to avoid climate collapse
The Eurocrat

Brussels to tinker with tools to avoid climate collapse

by Beatriz Ríos 4 min. 12.07.2021 From our online archive
Discussions on how to reach climate targets take large step forward
Road traffic around Paris
Road traffic around Paris
Photo credit: AFP

The European Commission will unveil on Wednesday a radical overhaul of energy, transport and forestry legislations to slash greenhouse emissions by around 55% over the next ten years. 

After years of rousing slogans it is now time for Brussels to sharpen the chisels and show the world it can meet its lofty ambitions.

As EU climate chief Frans Timmermans put it, the so-called "Fit for 55" strategy “will align our laws with our ambition”.

Dramatic revamp

In April, the 27 EU countries agreed with the European Parliament to raise the target for cutting emissions to 55% from 40% 2030 - measured from a 1990 basis - and achieve climate neutrality by the middle of the century.

The tougher goal means a dramatic overhaul of all the laws that have enabled the bloc to reduce greenhouse gas emissions over the past decade. The good news is that most of the laws already exist. The bad news is that the impact will be unprecedented, both for industries and citizens.

Energy and transport - the two main sources of emissions in the bloc - will, unsurprisingly, be affected the most. But so will forestry and the use of land. And there is a plan to tax imports from countries that are worse polluters.

With the EU still heavily relying on fossil fuels - and considering its strong dependence on oil and gas imports particularly from Russia - boosting clean power will be key for the transition to a climate-neutral economy. And it is not only about which type of energy we use, but also how much, which means that EU targets for energy efficiency will also receive an update. 

Energy and transport

The Commission is expected to tighten standards for carbon emissions for cars and vans, calling for a massive drop by 2030 that will shake up the sector, as it aims to move faster to mobility that emits zero greenhouse gases.

Brussels will also expand the EU carbon market (EU ETS) that establishes an emissions cap for power and manufacturing industries as well as airlines, and allows companies to trade emission allowances. 

Each EU country has binding targets for greenhouse emissions in those sectors and the new climate goals mean that these also will need to be updated. President Ursula Von der Leyen is expected to expand the market to include maritime transport and set up a new trading system for road transport and the building sector. Allowances for the aviation sector could be reduced and the Commission could push the industry to use cleaner fuels.

Because the new regulation could lead to higher prices in housing, transport, and energy, the Commission will set up a Climate Action Social Facility -partially funded via the EU ETS - and governments will be urged to use it to help lower-income households cope with the impact of the measures.

Global contribution

Europe is responsible for just 8% of global greenhouse emissions, which is why the EU wants to push countries outside the bloc to also transform their economies. One way to do so is by imposing a tax on products coming from less sustainable countries, called the carbon border adjustment mechanism. 

The Commission's new forestry strategy is likely to be another source of controversy. It serves three different goals: protect natural habitats and biodiversity, serve as a source of bioenergy and act as a carbon sink - meaning, absorbing CO2 emissions. Basically, Brussels wants to plant more trees.

But the issue divides industry and environmental organisations over how to balance between protecting climate change and preserving the economic function of forests, for instance as biomass fuel. Some governments say the EU is overstepping its competencies trying to regulate forests.

Another issue that divides EU countries is whether or not to consider nuclear power as sustainable. Last week, 80 members of the European Parliament backed that idea, while Germany, Austria, Denmark, Luxembourg, and Spain called on the Commission to do the contrary.

Getting all countries of the EU as well as the Parliament to agree on the climate plan was not an easy task. Designing the way forward will not be any easier.

What the Eurocrat will be also watching:

On Monday, US Secretary of the Treasury Janet Yellen will join EU Finance Ministers in Brussels to talk about the economy. The issue of a potential EU "digital" tax on large technology companies may be on the table.

The Commission was expected to come up with a plan to tax global technology giants but will now await a possible agreement at the G20 after last week's breakthrough on a global corporate minimum tax rate last week.

On Tuesday, ministers will assess the first bunch of national recovery plans the Commission has already approved - including Luxembourg’s - which countries needed to submit to apply for funds from Europe's €750 billion recovery fund.

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