September 27, 2021

The ‘Green Pact’: Brussels unveils its plan to decarbonize its economy

End of gasoline cars, kerosene tax in the aviation sector, taxation of imports, reform of the carbon market – at the risk of increasing the price of fuels … Brussels unveiled, on Wednesday July 14, its legislative ‘big bang’ project to meet the EU’s climate targets.

The European Commission has presented twelve texts whose purpose is to reduce the continent’s greenhouse gas emissions by 55% by 2030 compared to 1990, measures which will be the subject, for at least one year, of bitter discussions between MEPs and Member States.

‘Europe is the very first continent to present a comprehensive green architecture: we have the target, and now the roadmap to achieve it,’ Commission President Ursula von der Leyen said at a press conference.

If the social consequences of certain proposals worry – after the movement of yellow vests in France, in particular – Ursula von der Leyen wished to reassure: ‘Our plan combines the reduction of carbon emissions with measures to preserve nature and place employment and social equity at the heart of this green transformation.

Brussels defends in particular the end of the marketing of gasoline cars from 2035. A choice that worries the automotive industry: it notes a lack of charging stations and fears the effects of an industrial transformation that could cause bleeding jobs.

The European Commission is planning a boost to install charging points for electric vehicles ‘every 60 kilometers’.

The EU also proposes to tax kerosene for flights within the EU from 2023, while imposing a minimum rate of biofuels – enough to alarm companies who fear a ‘distortion of competition’ with the rest of the world and denounce a ‘counterproductive’ measure.

‘Aviation is on the path to’ decarbonization ‘and does not need’ punitive measures like taxes ‘to change, the International Air Transport Association (IATA) said in a statement.

‘A historic’ climate package ‘

But the main pillar is a considerable expansion of the European carbon market (ETS) established in 2005, where the ‘permits to pollute’ required for certain sectors (electricity, steelmakers, cement, intra-EU aviation) are exchanged, representing 40% of emissions of the Twenty-Seven.

Until now, most of the companies targeted have been offered free emission allowances, which they can resell. Brussels intends to restrict them drastically.

Brussels also wants certain imports (steel, cement, electricity, etc.) to be gradually subject to ETS rules from 2026: importers will have to buy ’emission certificates’ based on the carbon price they would have had to pay if the goods had been produced in the EU.

The idea is to eliminate all ‘unfair’ foreign competition and to deter relocations. For the Commission, this is a ‘border adjustment’ and not a tax, to counter the accusation of protectionism. The receipts will feed the European budget.

For the sake of balance, the free allowances distributed to EU manufacturers and airlines to face foreign competition would very gradually decrease, between 2026 and 2036, before disappearing.

‘This is a historic’ climate package ‘. The price of CO2 will automatically rise to a level having a major impact on the economic models of industries’, which will have an interest in adopting clean technologies, estimates Pascal Canfin, president (Renew, liberals) of the Environment committee in the European Parliament.

Brussels also wants to extend the ETS to maritime transport, road transport and heating of buildings on a ‘second carbon market’ from 2026.

In practice, this would amount to forcing fuel or heating oil suppliers to buy emission allowances at the price of CO2, mechanically passing on this additional cost to household bills.

‘We see a lot of carrots, without the shadow of a stick’

Environmental NGOs and MEPs of all stripes are fiercely opposed to it, fearing social movements: ‘It is a risk yellow vests and red hats combined (…) for a very low climate gain’, judge Pascal Canfin.

By reaching the most vulnerable, tenants of poorly insulated housing or inhabitants of the countryside, ‘the Commission seems to forget that it is the middle classes who will pay the price’, agrees Agnès Evren (EPP, right).

‘Buildings monopolize 40% of energy consumption, and road transport emissions continue to swell, the trend must at all costs be reversed, in a fair and social way,’ defended Ursula von der Leyen .

The Commission promises a ‘social action mechanism’ – a fund fed by the revenues of the ‘second ETS’ and valued by a European source at 70 billion euros over ten years to counter fuel poverty.

But Domien Vangenecheten, from the NGO E3G, denounces the expected extension, for years, of free emission quotas to manufacturers: ‘We see a lot of carrots, without the shadow of a stick’.

Green elected officials are calling for their immediate stop, also demanding a ‘floor price’ for CO2. Conversely, steelmakers plead for the long-term maintenance of this aid, deemed necessary for their competitiveness.

‘Ecology and the economy must not be opposed, it is crucial to consider the social dimension (…) and to refuse a creeping deindustrialisation of the EU’, thunders the MEP (PPE) Manfred Weber.

The Commission also wants to considerably increase the share of renewable energies targeted in 2030, including by including biomass extracted from forests – to the chagrin of the NGO Greenpeace, which also denounces the idea of ​​a CO2 absorption target. via natural ‘carbon sinks’ (forests) which would mask insufficient reductions in industrial emissions.