In the sixth chapter of The Wonk’s Survival Guide to the European Green Deal, POLITICO looks at the EU’s ambition to serve as a model for the rest of the world in the fight against climate change.
The moral case for the European Green Deal
Western Europe and the UK spent centuries burning vast amounts of coal.
By KARL MATHIESEN
The European Green Deal is going to impose wrenching change on the EU — upending everything from how people heat their homes to what they drive and where they work (or if they have jobs at all). It also comes with a serious risk: that other countries won’t follow suit, dealing a body blow to the competitiveness of European companies.
The effort is made more challenging by the fact that the bloc is responsible for less than 10 percent of global carbon dioxide emissions — meaning the EU is too small bend the curve and avoid the worst consequences of a changing climate if it can’t get other countries to join the fight.
And yet, some would say the EU bears a special responsibility to make the effort. While its emissions today may pale in comparison with some other industrial titans, Europe has been burning fossil fuels since the Industrial Revolution almost two centuries ago — making the EU, along with the United Kingdom and the United States, responsible for the majority of the greenhouse gases released into the atmosphere and now warming the planet.
How to sell the Green Deal
The EU can’t beat climate change without getting the rest of the world on board.
By KARL MATHIESEN
When it comes to climate change, it’s better to be inside the tent emitting out. That’s a point the European Union will be laboring to make to allies and adversaries as it pushes for aggressive domestic cuts to greenhouse gas production under its Green Deal.
It’s a risk and reward scenario for the world’s self-proclaimed climate leader. Being out front is only good if you don’t end up alone. The big question for European Commission President Ursula von der Leyen’s “geopolitical Commission” is how to bring others along for the ride. Its options include …
… nurturing big alliances
Great power climate politics roared back into life in the last months of 2020. With China launching a net-zero goal for 2060 and Joe Biden winning the White House, the EU now has two partners who, on paper at least, match the bloc’s own long-term ambition.
In the early 2010s, the U.S.-China relationship ran global climate diplomacy. But a decade later, the EU finds itself in a very different world. For one thing, it’s now out in front, and the other two big economies are intensely studying the European Green Deal.
Last week, EU Commission Executive Vice President Frans Timmermans gave what amounted to a Green Deal seminar for China’s top climate policy thinkers at Tsinghua University. That’s part of a broad program of engagement that has seen the EU move climate change to a first-order foreign policy issue.
As for the other side of the Atlantic, a picture does the talking. After Biden named former U.S. Secretary of State John Kerry as his new presidential envoy on climate change, the Commission circulated photos of Timmermans and Kerry clutching one another like a pair of long-lost old cronies.
… commanding climate’s top table
The EU’s traditional place in climate diplomacy has been as big sister to a coalition of mostly small, developing countries that pledge to rapidly cut emissions. That in-group, out-group strategy has a patchy record. But it did prove effective when the U.S. joined the club during the Paris climate talks in 2015 and last-minute concessions were gained from big emerging economies.
With China and the U.S. moving in the same direction as the EU, the goal will be to get G20 economies — responsible for around three-quarters of greenhouse gas emissions — to commit to serious cuts during this decade. The first opportunity for countries to join the vanguard will be December 12, when the U.K., France and the U.N. host a summit exclusively for leaders who make “bold” new pledges.
… putting the green in global finance
Alongside its geopolitical ambitions, the EU plans to use its economy as a lever. That puts the bloc in a powerful position to set global standards for finance.
To do that, the Green Deal focuses on a regulation that has been winding its way through the EU institutions since 2018. This sustainable finance taxonomy will allow the European Commission to define what financial activities can be classified as “green.” U.S. funds are being warned to prepare for pressure from investors to disclose how much of their portfolios align with the EU taxonomy when it begins being applied in late 2022. China and the EU have committed to working to develop a common language.
Alongside the taxonomy, the Commission is also developing a Green Bond Standard, and last week the European Central Bank announced stress tests for the climate risks facing all eurozone banks.
… squeezing aviation and shipping
The U.N. bodies that regulate the world’s air and ocean transport have failed to address carbon emissions in a way that has satisfied the EU. So Brussels wants to use its position at the center of global travel and trade to set standards that ripple beyond its borders.
Efforts to impose new emissions reporting rules on vessels that stop in EU ports are well advanced. The Commission has also flagged that ships may find their pollution subject to the Emissions Trading System. In the skies, the Commission wants to close loopholes for aviation in the ETS, review aviation taxes and push for tougher international rules.
… pivoting to Africa
2020 was supposed to bring a reset in Europe’s relationship with its southern neighbors. The EU-Africa summit planned for October was delayed by the pandemic, but when leaders do meet, expect the “green transition” to top the agenda.
As Africa’s population and economy grow they will be crucial to future global emissions. Europe will look to influence decisionmakers on the continent through its overseas aid and investment budget. Africa will ask Europe to live up to its commitments on delivering climate finance that not only halts emissions but helps communities adapt to impacts that are already disrupting life.
… cleaning up development finance
Hundreds of public development banks signed a declaration in November that inched toward restricting investments in fossil fuels. But some of the biggest multilateral banks abstained.
European banks are leading the way, in particular the European Investment Bank, which announced a €1 trillion green financing package. European influence in global institutions could help divert these huge funding sources into cleaner development and help the EU export its Green Deal values.
“We challenge everyone to beat us to it, because in a race to zero we are all winners at the end,” Timmermans told the audience in China.
Brussels struggles to export its ideals
EU’s focus on cars and cows belies talk of greener trade.
By JAKOB HANKE VELA and PAOLA TAMMA
Europe is much better at exporting cars than climate goals.
The European Commission has promised to use its free-trade agenda to promote its Green Deal ambitions around the world, but that’s a lot easier said than done.
The EU is the world’s leading trade bloc and is flexing two big muscles to coax trade partners into cooperating on climate: a border tax on carbon-intensive imports and a pledge to only sign trade accords with partners willing to sign up to binding green goals.
On paper that looks great, but experts point out that green commitments in trade accords fail to compensate for the environmental harm such agreements do in the first place — as they’re based around climate pariahs like cars and cows. As for the carbon border levy, Commission officials say such a mechanism is more of a theoretical threat than a cast-iron enforcement measure.
EU politicians say they recognize the contradiction between its climate and trade policies, but the solutions they are proposing do not address that contradiction.
While a proposed carbon border tax aims to increase levies on imports of carbon-intensive goods, EU trade deals currently under negotiation still aim to remove tariffs on imports of polluting goods.
Not so green trade deals
Europe has vowed to step up the enforcement of environmental commitments in trade deals, but the core business of such agreements is to boost exports of EU industrial goods such as cars and to make cheaper the imports of raw materials and intermediate goods that EU companies use.
A recent study by Joseph Shapiro from the University of California found that EU trade policy undermines its climate agenda because EU tariffs are lower on carbon-intensive goods.
“Right now the EU has much higher protection [against imports of] cleaner goods and much lower protection on the dirty goods,” Shapiro said.
As an example of topsy-turvy preferences, Shapiro gave the example of “metal versus wooden containers. Those seem objectively similar but metal containers require more greenhouse gas emissions to produce,” but still face lower tariffs. Helping farmers can be particularly problematic. The EU also imposes low tariffs on fertilizers produced with lots of natural gas but slaps high tariffs on agricultural goods produced more efficiently outside the EU. There are high duties on cane sugar, for example, to protect EU beet producers.
Shapiro explained that the practice of low tariffs on dirty goods and higher duties on greener goods creates effective subsidies for carbon-intensive industries. “European countries like France, Germany, Norway, and the U.K. have among the largest such subsidies, with subsidy values exceeding $175/ton [of CO2],” while “Russia, India, and China have smaller subsidies.”
The EU’s brand new cars-for-cows trade agreement with Mercosur has faced fierce backlash in France, Austria and the Netherlands, for example, over its environmental impact on the Amazon rainforest.
Leaders are looking at an upcoming trade deal with New Zealand to set a template for a new way of enforcing green rules, such as commitments to ratify the Paris climate agreement, set carbon reduction targets and ratify labor norms. But experts say such rules won’t be sufficient to improve the negative climate effect of the EU’s trade policy.
“Of course it’s nice to have a sustainable development chapter, and for sure we could improve it, but the real problems in relation to environmental objectives are in the substantive chapters, because those are the chapters that deal with trade liberalization,” said Nathalie Bernasconi from the International Institute on Sustainable Development.
Taxing carbon at the border
The Commission will unveil a carbon border adjustment mechanism — a levy on CO2-heavy imports into the bloc — by next summer to push trading partners to reduce their emissions. The goal is to persuade top emitters like China and the U.S. to adopt comparable climate measures to those of the EU.
“Either our climate policies have comparable ambition and put comparable constraints on economic sectors, in which case we’ll find a way not to apply measures at the border, or our ambition is not the same, in which case we will protect our policies and take measures at the border to even the constraints our sectors have,” said a senior EU official.
It is unclear what sectors and countries the levy will target. It’s likely that Brussels will target selected proximity imports like cement and electricity. Chemicals and steel, which are widely traded, are other candidates being studied by the Commission.
However, tackling these marginal imports wouldn’t give the measure the teeth it needs to be a serious incentive for the world’s largest economies to take the climate-friendly path the EU has chosen for itself. The choice is between a wide scope hitting Washington and Beijing, with the risk of political fallout, or a limited one, which wouldn’t have the desired impact.
Its design is also fiendishly difficult, as it needs to treat both domestic products and imports equally to be legal under World Trade Organization rules.
The road to COP26 lies through Brussels
If the UK wants global climate talks to be a hit, it needs the European Green Deal to succeed.
By CHARLIE COOPER
They might be parting ways with Brexit but on climate, the EU and the U.K. are heading in the same direction.
In November 2021, the U.K. will play host to the delayed COP26 United Nations summit — long billed as a make-or-break moment for governments to boost the carbon reduction pledges they made in the 2015 Paris Agreement.
Prime Minister Boris Johnson’s government wants COP26 to be a landmark summit, not least because success in Glasgow, the host city, will show that the U.K. can still play an important convening role on the world stage, despite being outside the EU tent. To that end, London needs the European Green Deal to succeed.
The U.K. got out ahead of the EU in 2019 by cementing its 2050 net-zero carbon commitment in legislation; the European Climate Law — centerpiece of the European Green Deal — won’t be finalized until sometime next year.
The Climate Law’s successful ratification is a “critical” first step for a successful COP26, said Nick Mabey, CEO of the E3G climate think tank, as it will “put pressure on the U.S., China, Japan and others to come forward with specific 2030 [emissions reduction] targets and plans.”
The EU is expected to put forward its “nationally determined contribution” (NDC) to international carbon-cutting efforts before the end of the year, including a new target for 2030, likely to be a 55 percent emissions reduction on 1990 levels. First, that target has to be agreed by EU leaders at December’s European Council summit on December 10 and 11. That comes just in time for the U.K.’s COP26 warm-up event, the virtual Climate Ambition Summit on December 12.
The U.K. is expected to announce its own NDC sometime between now and the summit and some commentators, like the Energy and Climate Intelligence Unit’s Richard Black, believe that “Brexit politics” might mean London tries to go further and faster than the EU.
Besides the friendly competition on the NDCs, there are several areas — beyond the core carbon-cutting pledges — where the U.K. and the EU can work together to push for greater ambition from the countries meeting at COP26, Mabey said. That could include initiatives on the “greening” of public finance “by stopping all public support for fossil fuels and doubling development bank support for climate action.”
An agreement on phasing out coal could also be an area for joint action, Mabey added.
In terms of the COP26, the U.K.’s yardstick for a successful summit will be to show that “the world is on an accelerating and irreversible transition to a low carbon economy,” as COP26 Envoy John Murton told POLITICO’s EU Confidential podcast. Joe Biden’s victory in the U.S presidential election has led, U.K. officials say, to a sea change in the ambitions of countries mulling their NDCs.
The most important international dynamic is among the economic giants: the U.S., the EU and China. Here the U.K. can be only a bystander, but as the summit president, it will be hoping that consensus prevails over confrontation.
On that score, one important policy area in 2021 will be carbon border adjustments (effectively levies on carbon-intensive imports). Both the EU and Biden’s team are looking at such measures. If they are implemented, it’s possible China and other Asian economies could see themselves as the targets — making them somewhat less inclined to cooperate with Western countries lobbying for more ambition at COP26. One to watch.
No hiding from EU’s eyes in the sky
Space sniffers make it easier to track down greenhouse gas emitters.
By KALINA OROSCHAKOFF
“Big Brother is watching you.” But for once, that’s good news … for the Paris Agreement and the EU’s Green Deal.
The global climate deal is largely built on trust that countries cut greenhouse gases in line with their pledges. And the EU is worried that the Green Deal could leave it lagging against competitors with much laxer emissions rules.
But, absent a global government, who’s really checking? EU satellites, that’s who.
The bloc’s open-source Copernicus earth observation program is increasingly allowing regulators, data analysts and campaigners to track, uncover and police polluters from the skies — whether they like it or not.
“You don’t need a global government that will never come, since you have transparency … you can give regulators the possibility to police jurisdictions beyond the EU,” said Antoine Rostand, founder and president of Kayrros, a data analytics company that uses EU satellite data to “detect, quantify and attribute” large methane emission sources.
Brussels is gearing up to use its satellites to spot and track global methane emission hotspots — part of plans to clamp down on the highly potent greenhouse gas often emitted in conjunction with oil and gas production.
The idea is that greater transparency will oblige companies and governments to deal with their emissions. “You will have a lot of players that will have to change. They can’t hide anymore,” said Rostand. “Importers, consumers will want to know: ‘Is my gas free of methane?’”
The technology also makes it easier for EU regulators to keep dirtier energy products and imports outside their borders by applying methane emission standards and carbon border levies — a key part of the Green Deal.
The political challenge, of course, is how to uncover polluters without raising the hackles of other global powers.
Brussels is aware that its methane plans set up potential clashes with countries such as the U.S. and Russia — both major gas exporters to the EU — and says it will approach any future legislative efforts in close coordination with “international partners.” In climate negotiations, major polluters and emerging powers such as China and India also tend to jealously guard their sovereign right to set their own policy course and record their emissions without interference from outsiders.
But satellites will make it much easier to scrutinize and expose emitters by making it possible “to see the polluters, so we know where it comes from,” Rostand said. “Then big trading blocs can impose norms.”
Methane is only the beginning. The technically more complex, but more important, prize is tracking man-made carbon dioxide emissions and their sources, which are at the center of EU and global climate policy.
“This will be the first time ever that you will have global-scale CO2 resolution that allows you to distinguish anthropogenic from natural [emissions]… the sensor is so accurate to allow this to happen,” said Josef Aschbacher, the director of earth observation programs at the European Space Agency.
The data will be “useful to verify the claims and numbers which are provided” by countries under the Paris Agreement, which requires a global review of emission cutting efforts every five years, starting in 2023, Aschbacher said, adding, “The big advantage is … you can really compare figures between China, the U.S., Europe and Africa … you don’t need to rely on sources and instruments in these countries.”
The idea is for data to be ready for the Paris Agreement’s review exercise in 2028. China, Japan and the U.S. are working on similar technology, but the EU’s program is ahead in terms of “accuracy and quality,” Aschbacher said.
“Normally in space, it’s really the U.S. and China who make the headlines. In earth observation, Europe has a global leadership,” said Aschbacher.
All photographs by Getty Images and iStock; illustration via iStock
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