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THE WORLD Climate experts, activists and officials gathered in Madrid this week for the 25th UN climate talks. But the big news is happening far away in Brussels, where the new president of the European Commission, Ursula von der Leyen, barely 11 days in power, impatiently announces the Green Deal. The 24-page document reads like a wish list to turn Europe into a living demonstration of how a large economy can both prosper and prioritize the health of the planet. It covers everything from housing to food, including biodiversity, batteries, carbon-free steel, air pollution and, above all, how EU will extend its vision beyond its borders to the rest of the world. “Our goal,” said von der Leyen, “is to reconcile the economy with the planet.” His plan is broad on ambition, but in many places vaguely frustrating on the details.
Maximum billing is a commitment to make Europe carbon neutral by 2050. It’s no surprise. The target has been approved by EU European Parliament in November, a strategy for achieving this was published in 2018 and EU heads of state started debating it at this week’s summit meeting, which The Economist went to press. The green opus of Mrs. von der Leyen promises to develop a bill that would enshrine the 2050 goal by March 2020.
That would EU the largest economic bloc in the world (and the largest emitter of greenhouse gases) to adopt the recommendations of climatologists according to which all emissions must stop or be offset by the middle of the century for global temperatures to increase no more than 1.5 to 2 ° C above the pre-industrial levels. It is also a considerable increase in ambition: existing policies EU on track to reduce emissions by only 60% from 1990 levels by the middle of the century. But long-term goals like this are easy to define and difficult to make binding.
This last point makes the second global declaration of the Green Deal, concerning a short-term objective for 2030, more significant. By the summer of 2020, the commission intends to present a plan to reduce emissions by 50 to 55% in 2030 from 1990 levels. This represents a step forward from its current goal of reducing emissions. 40% in the same amount of time (see graph), but independent analysis suggests that the end of 50% of the range will not account for much of the stretch. Existing renewable energy and energy efficiency policies, for example, are already expected to help achieve 45-48% reductions by 2030. Green NGOs would like to see the EU sweat a little more and strive to reduce by 65% by 2030, which models suggest is necessary if the bloc wants to do its part to limit global warming to 1.5-2 ° C.
All this green ambition has a price. The commission estimates that an additional investment of 175 to 290 billion euros (192 to 320 billion dollars) will be required each year to reach its net zero targets. Much of this will come from private investors. One way to encourage them to participate is the new financial regulations. December 5 EU the negotiators have concluded a provisional agreement on financial products considered to be “green”. Next year, large European companies will be forced to disclose more information on their environmental impacts, including carbon emissions. These measures, it is believed, will give clearer signals to the markets and help the money to invest in worthy investments.
Another lever is the European Investment Bank, a development bank with around 550 billion euros on the balance sheet, which must be transformed into a climate bank. It has already committed to phasing out fossil fuel financing by 2021. By 2025, Werner Hoyer, his boss, wants 50% of his loans to be spent on green projects, up from 28% today , and the rest to climate-aligned investments. change the goals. Part of this money will go to a “just transition” fund, worth 100 billion euros over seven years. The loss of jobs is an inevitable consequence of the decarbonisation of the European economy; the coal industry alone employs around 250,000 people, mainly in Eastern Europe. The fund will try to alleviate some of this pain and the political opposition it provokes.
The Green Deal goes beyond the framework of previous climate policies. One area in which he enthusiastically enters is commerce. According to the commission’s proposals, EU will simply refuse to enter into new trade agreements with countries that do not meet the Paris Agreement requirement that signatories must increase the scope of their decarbonization promises, called “nationally determined contributions” or NDCs, every five years. This would not mean any new deal with America while Donald Trump is president; it should abandon the Paris agreement at the end of 2020. And, because the first cycle of NDCs scheduled for next year, it would put pressure on the countries dragging their feet on them, of which there are dozens – including China and India.
The agreement also outlines plans for a carbon border adjustment tax. Under the EUUnder the emissions trading system, large industries pay a fee of around € 25 for each tonne of carbon dioxide they emit. Other regions have similar regimes with different carbon prices. A border adjustment mechanism would level the playing field.
Supporters of the Green Deal are the first to say that this is just a road map for climate action. Many, many new policies and associated technical details will need to be resolved and approved. Ms. von der Leyen declared the Green Deal “the moment of man on the moon in Europe”. In reality, the landing is still far away. A more appropriate analogy for this week’s announcement would be President Kennedy’s 1961 promise that America would reach this celestial body by the end of the decade. It remains to be seen whether Ms. von der Leyen’s speech is as good as that of Kennedy. ■
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This article appeared in the Europe section of the print edition under the title “The way the wind blows”
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