Officials in Europe are prepared to introduce legislation that will wean one of the world’s largest and most polluting economies off fossil fuels considerably faster than other governments have promised. The suggestions could include phasing out coal as a source of electricity and placing tariffs on polluting imports, a move that could spark global trade wars.
The European Commission’s package of around a dozen legislative proposals, due on Wednesday, aims to reduce greenhouse gas emissions quickly and meet an ambitious climate goal already enshrined in law: the 27-nation bloc has pledged to cut greenhouse gas emissions by 55 percent by 2030, compared to 1990 levels. The measure is expected to stand in stark contrast to several other countries’ hazy intentions to achieve carbon neutrality by mid-century.
The proposals, dubbed “Fit for 55,” are simply that: suggestions. Before becoming legislation, they will be negotiated over several months by the 27 member countries and the European Parliament. They will almost likely draw attention to Europe’s own reliance on obtaining and burning fossil fuels on its own soils, from North Sea oil and gas drilling to coal mining in nations such as Germany and Poland.
The most problematic aspect is a fee on carbon emissions at the border. It would levy tariffs on greenhouse gas emissions linked with products imported from outside the European Union, effectively shielding European businesses against goods manufactured in countries with less stringent climate legislation. Steel, cement, iron, and fertilizers are among the products it could target, according to a draught leaked in June.
This carbon border tax has the potential to disrupt global trade and spark a World Trade Organization fight over protectionism, as well as generate new diplomatic fault lines ahead of the international climate negotiations in Glasgow in November.
The gathering in Glasgow is a significant opportunity for major emitter countries to demonstrate what they will do to curb greenhouse gas emissions that have put the planet on a catastrophic warming path. According to scientists, the world’s emissions must be cut in half by 2030, which would necessitate the harshest and fastest reduction from the world’s top polluters, especially the United States and Europe.
All eyes are on the goals established by the United States and China, the two countries that currently create the most greenhouse gases, and, more importantly, how they will achieve them.
The idea of a carbon border tax has been roundly attacked by China and India. Japan is adamantly opposed. And the US has simply stated that it is considering imposing its own carbon border tax.
It’s yet unclear which products would be subject to the tax. The United States, for example, is concerned about the potential impact on domestic steel production, and it is unclear if the proposed border tax would account for the carbon emissions intensity of imported steel.
With regard to a potential European border tax, the United States is in a difficult position. The Biden administration is working hard to rebuild transatlantic ties, notably on climate change. Despite this, numerous US corporations may be exposed due to the lack of carbon pricing legislation in the US.
The Biden administration has floated the idea of imposing its own carbon border tax, though it’s unlikely to pass in a divided Congress.
Other components of the legislation package are likely to spark debate inside the European Union’s 27-member bloc. Some European carmakers are likely to protest efforts to phase out the sale of new internal combustion engine vehicles. Countries with major coal operations, such as Poland and Hungary, are likely to oppose efforts to phase out coal from electricity generation.
The timing of the European draught law is crucial, as it is intended to underline Europe’s position on climate policy advancement while also putting pressure on other major emitters such as China and the United States.