Focus

In December 2019, European Commission President Ursula von der Leyen revealed the continent’s ambitious plan to become carbon-neutral by 2050. According to von der Leyen, the EU Green Deal is a roadmap incorporating 50 policy measures for a climate and nature-friendly Europe. “Our goal is to reconcile our economy with our planet and make it work for our people. This is Europe’s ‘man on the moon’ moment,” she said at the time.

The three fundamental tenets of the Green Deal are to ensure there are no net emissions of greenhouse gases by 2050, no person or place is left behind, and economic growth is decoupled from resource use. It is designed to promote the efficient use of resources by moving to a clean, circular economy through the Circular Economy Action Plan, restore biodiversity, and cut pollution.

TAKING ACTION

A proposed European Climate Law will enshrine the 2050 climate-neutrality objective into EU law, with all policies contributing to this aim. Current legislation will be up for review to guarantee it orients with the new goals. In short, this means EU institutions and member states will be collectively bound to achieve the target, with all sectors of the economy and society committed to play a role.

Commenting on the law, EVP for the European Green Deal Frans Timmermans says: “We are turning words into action, to show our European citizens that we are serious about reaching net-zero greenhouse gas emissions by 2050. The European Climate Law is also a message to our international partners that this is the year to raise global ambition together, in the pursuit of our shared Paris Agreement goals.”

Achieving net-zero will be easier said than done. Already, large corporates in certain industrial sectors are lobbying to water down aspects of the Green Deal, arguing that goals are unachievable under the new guidance. For example, the emission reductions target for 2030 is currently set at 40%, but has been increased to 50-55% under the Green Deal. In September, however, members of the European Parliament voted for an upgrade to 60%, with the final figure yet to be decided.

This aside, for Europeans to reach net-zero midway through this century, all economic sectors will need to take action. This includes measures

SPECIAL GREEN THINKING

such as investing in environmentally-friendly technologies, supporting innovation, cleaner and cheaper transportation, decarbonising the energy industry, ensuring buildings are more energy efficient, and working with international partners to improve worldwide environmental standards.

Meanwhile, the European Climate Pact is intended to rally citizens, communities, schools, regions and organisations to secure a better future. Here, the emphasis is to give “everyone a voice and space to design new climate actions, share information, launch grassroots activities and showcase solutions that others can follow”.

This is Europe’s ‘man on the moon’ moment

CREATING COOPERATION

Establishing climate neutrality within the next 30 years will require significant public and private investment, with the EU providing financial and technical assistance to help with the transition to the green economy.

The Just Transition Mechanism will help mobilise at least €100 billion ($118 billion) between 2021-2027 in the most affected regions. This is a mere drop in the ocean compared to the €1 trillion in financing over the next decade through the Green Deal Investment Plan. This will be derived from several sources, including capital from EU and national budgets, coupled with attractive investment conditions and measures to boost green public and private funding.

To maintain Europe’s climate-neutrality ambition, a Carbon Border Adjustment Mechanism (CBAM) is being proposed to reduce the risk of carbon leakage. This means that if EU products are replaced by more carbon-intensive imports or production is moved from the EU to countries with less stringent policies, then the mechanism (effectively a tariff) would ensure the price of imports better reflect their carbon content. The introduction of the CBAM is planned for Q2 2021.

The Green Deal will affect everyone operating within Europe. The expectation is that there will also be tougher sustainability commitments in future trade agreements.