The EU is significantly tightening the climate target – what that means

The President of the EU Commission, Ursula von der Leyen, announced the tightening of the climate target.

Yves Herman / Reuters

Ursula von der Leyen delivered her first State of the European Union speech in front of the EU Parliament in Brussels. He dealt with current affairs such as the Covid-19 pandemic, the billion-dollar aid package for the economy torn apart by the fight against the virus, the loss of confidence in free trade talks with Britain, migration and the works of foreign policy. One of her sincere concerns, the Green Deal, was not neglected despite the multitude of possible topics. Unsurprisingly, von der Leyen announced a tightening of the intermediate goal for greenhouse gas reduction by 2030. “We have to move on,” he said.

How much can it be

EU member states have agreed that the EU should be climate neutral by 2050. This means that the remaining CO_twoEmissions are offset. As a result, the EU had to adjust its intermediate target for 2030. The only question was how much. Basically, the 1990 emissions are used as a comparison. Until now, greenhouse gas emissions should be reduced by 40% by 2030 compared to 1990. In the presentation of the Green Deal, the EU Commission announced that the value should be increased from 50 to 55%. Last week, the EU Parliament’s Environment Committee demanded a 60% cut, and green politicians even dream of even higher values. Unsurprisingly, von der Leyen now wants to write 55% in the legal text after studying comprehensive impact evaluations.

What does this tighten mean?

If the EU wants to achieve the new goal, the confederation of states must give its CO_two– Significantly reduce emissions. Consequently, all major emitters must wait for the EU to issue new regulations to force them to behave in a more climate-friendly way.

Who does it affect?

Energy, transport, agriculture and industry are the major sources of CO_twoEmissions in the EU. Factories in the chemical and cement sectors are already subject to the EU emissions trading system (ETS). On the one hand, it distributes CO emission certificates_two and on the other hand auction said rights. In general, a “cap” is set for the maximum possible emissions. Then this should be gradually reduced. In theory, this increases the value of allowances, and companies can trade them so that those who can reduce greenhouse gas emissions can do so at comparatively low costs. With the tightening of the 2030 target, it can be expected that fewer free certificates will be distributed in the future and the cap will be lowered further. In addition, the EU Parliament should decide on Wednesday that the shipment will be included in the system. In general, the expansion of the ETS to other areas is under debate. The EU also sets guidelines for the issuance of new vehicles registered in the EU. Here too there could be stricter rules.

What does the economy say?

In principle, most companies and associations have recognized the signs of the times. Many are already moving in the direction of more climate-friendly production and are setting targets. For example, technology group Apple wants to become climate neutral by 2030, across all products, raw materials and the entire supply chain. The discussion in Europe is likely to revolve primarily around the strength and speed with which climate change should be tackled. The German Chemical Industry Association (VCI) announced that it considered the 55% target to be “extremely ambitious” and called for “accompanying measures”. In principle, energy-intensive industries such as chemicals fear that production will shift to countries with less stringent environmental regulations, such as China and the United States. German chemistry must invest huge sums by 2050, writes VCI Managing Director Grosse Entrup. You demand that your industry continue to receive enough free certificates in the ETS as compensation.

What “accompanying measures” are planned?

The EU Commission has recognized the fears of the industry and wants to use a kind of CO_two– Customs takes action against you. Anyone who imports products into the EU would have to pay a tax that roughly corresponds to the increase in environmental costs in the EU. This is to prevent the migration of energy intensive industries. But these plans are criticized. For example, the British petrochemical company Ineos, founded in Antwerp, Belgium, is of the opinion that export-oriented companies should receive an export subsidy in order to ensure that world markets remain unchanged. The VCI is critical of the border adjustment measures envisaged by the EU Commission. Establishing trade barriers for climate protection is a high-risk project that will make production more expensive in Europe and could trigger strong reactions from trading partners, the association writes.

What else is the Commission planning in the green zone?

Von der Leyen said on Wednesday that he intends to finance 30% of the € 750 billion construction fund through “green” bonds. He also wants to create hydrogen valleys in Europe and promote the energy renovation of homes.