Somewhat lost in the bedlam of headlines about flooding in Germany and wildfires in the US West, and more, each worsened by the deteriorating climate: the announcement of a European Green Deal. The coverage mentioned pronouncements of accelerated targets for reduced carbon output, and so on. The news cycle moved on.
But, wait. This looks like a big deal.
In fact, this has the hallmarks of a significant, even momentous step forward. First, it shows the EU, accounting for at least 15% of global economic activity, taking a stand in advance of this year’s UN global summit on climate change (COP26, November, Glasgow). The EU now is far more definitive than others in its commitments. For example, the statements by the US Biden administration preparing for taxes on imports from countries that fail carbon footprint outcomes seem less ambitious even while they add pressure on China and others to join in committing to do more.
The EU commits, for all 27 member states, to turn the EU into the first carbon-neutral bloc by 2050.
To get there, they pledged to reduce emissions by at least 55% by 2030, compared to 1990 levels. The details collectively are what the EU is calling “fit for 55”, a reference to the 55% reduction target.
Important, and perhaps lost for many: this is not just a press conference, with uplifting speeches, a handout, and pretty words from PR professionals. Included in the EU releases are new legislation, directives, and policy proposals. The website that hosts the Green EU deal information offers 18 separate documents of details – in each of many of the languages of the EU – plus press releases, fact sheets and videos. In this piece, we give a summary: subsequent pieces (we hope) will dig into some details.
The EU’s proposals are diverse
The subjects covered are many: Forest renewal; Switching from oil-based transportation; taking care of the poorer parts of the community who might be economically harmed during the transition; with investment in jobs for the post-fossil-fuel economy, and in clean transportation to reduce the impact of having fewer cars (or more expensive fossil fuels).
Can it be that we’re seeing a major economic force taking on the challenge of climate change? Going for the EU: the vast majority of its people seem aligned, with strong support for seeing addressing climate change as a top priority for Europe and for the world.
We’ve already seen Europe lead all other countries toward the adoption of policies on Internet privacy and personal rights (GDPR, the EU standard, which has prompted the adoption of similar legislation protecting individual rights in other countries and in individual US states, including California and New York). In doing so, it led in policy – and in framing the opportunities and challenges for incumbents and startups (and their investors). Now, the EU similarly is taking a position that at once sets its own goals and aims to offer guidance to other countries and regions on how to get carbon footprint reduction done.
The EU wants to achieve a whole-of-economy approach: building a “fair, competitive and green transition”. The overarching objectives of the EU plan are stated as: to transform the EU into a modern, resource-efficient and competitive economy, ensuring:
- no net emissions of greenhouse gases by 2050
- economic growth decoupled from resource use
- no person and no place left behind
Some specific proposals:
- By 2030 (select industry sectors with high energy demand and high fossil fuel footprints) will need to reduce their greenhouse gas emissions by 61%, compared to 2005 levels. Maritime industries (ships are notorious emitters of damaging gases) will join the list of sectors covered by this by 2025.
- To strengthen the financial systems to reduce road-transport emissions, the EU proposes “to start applying emissions trading from 2026 for road transport and buildings. This will be done in a separate system focused on upstream fuel suppliers, putting the responsibility on fuel producers to comply with the system, rather than requiring individual households or road transport users to take part directly. Emissions from road transport and building sectors will be capped, with the cap reduced over time so that total emissions fall.”
- To prevent ‘carbon leakage’, in which production is transferred from the EU to other countries with lower goals for emission reduction, the Commission proposes “a Carbon Border Adjustment Mechanism putting a price on imports of a limited number of high-polluting goods based on their carbon content”. This seems analogous to what the Biden administration has suggested for the USA, and perhaps presages that this will be a major theme for COP26 in Glasgow.
About The Author
John Conor Ryan
CEO, co-founder at Muinin pbc
John is a physicist and business analyst, working on macro-economics of the end of fossil fuel s. His analyses investigate and bild data to understand the transformation of the global economy that will emerge as the global economy moves away from burning oil and coal. Separately he leads a cyber security startup and advises a major European firm on technology strategies. Earlier work includes as a Google [x] senior director, overseeing an unannounced project, working in Taiwan leading a tech startup, and as a Monitor group partner, leading strategy analysis for technology companies – particularly where the strategies needed deep insight into the underlying physical technologies.He has a PhD in physics from Imperial College, London, and with art education from the Royal College of Art. He now lives in a floating home in Sausalito, California, with his wife, noted tech pioneer Dr. Mary Lou Jepsen, as well as a small dog and a collection of paddle boards and kayaks.