EU Climate Policy in Jeopardy

Over a year after the Paris climate summit, Europe has to come together and take the lead once more. Reform of the European emissions trading system is a matter of the utmost urgency.

Photo by unsplash.com

Celebrated as a major breakthrough a year ago and in force now for a couple of months, the Paris Climate Agreement ended the climate-policy deadlock in December 2015 and held out a long-term prospect of limiting global warming below 2°C.

To the surprise of many, the United States got on board alongside China – at least under then President Barack Obama. Equally surprising, however, coming four days after the Agreement came into force (on 4 November 2016) was the outcome of the US presidential election. During the election campaign, professed climate-change sceptic Donald Trump had announced that he wanted to pull out of the Agreement. Given the increasing global political uncertainty, Europe would be well advised to close ranks, resume dialogue on solutions for climate change and take the lead internationally.

Germany and France, together with the United Kingdom, are the chief EU emitters of greenhouse gases. They are duty bound to try to bring the positions of European states together and to breathe life into the Agreement without delay.

Between aspiration and reality

The fact that the path towards a coherent EU climate policy still has several hurdles to clear was brought home by the conference »One year after the Paris Climate Agreement: Ideas on the Coherent Implementation of Obligations in Europe« (http://www.fesparis.org) held on 7 February 2017. In the first place, unification of the European energy industry is confronted by what continues to be a nationally defined energy mix. The contrast between the French energy balance, 77 per cent of which is based on nuclear power, and that of the German economy, which is based both on renewable energies and CO2-intensive fossil fuels, sharply limits the available options in terms of establishing common ground. For example, the European Commission’s proposal to allocate the burden of reducing greenhouse gases in terms of the relative prosperity of the member states was deemed unfair by the French (link in German).

Common goal: reform of European emissions trading

Despite all the differences, the coming into force of the Climate Agreement provides opportunities for a re-orientation of European policy. On one hand, Germany’s energy transition, commonly referred to as Energiewende, sometimes derided in France, is not only a key component of a more climate-friendly energy mix, but as it were an “outstanding opportunity” (link in German) for the common European economy and society, according to SPD MP and environmentalist Dr Nina Scheer. On the other hand, it is widely accepted that reform of the European emissions trading market is a matter of urgency. In the face of continuing falls in oil and coal prices, not to mention the low prices in the European CO2 trading system, the incentive system for reducing CO2 emissions is not fit for purpose. Thus the Jean-Jaurès Foundation is not alone in thinking that there is a “major discrepancy between the obligation Europe entered into with the Paris Agreement and its main policy instrument for reducing greenhouse gas emissions” (link in German). In order to achieve the goal of a CO2 price that is both sufficiently high and calculable over the long term French environment minister Ségolène Royal favours a price corridor, on which the member states would have to agree on a minimum and a maximum price for certificates.

Royal, who represented France at the Rio conference almost 25 years ago, emphasised once more in her closing statement (link in French) Germany and France’s common responsibility to implement the Paris Agreement at European level as soon as possible. The EU environmental ministers agreed on 28 February 2017 to reduce the proportion of certificates to be auctioned by 2 per cent. At the same time, industry is to be allocated 2 per cent more free certificates so that competitiveness is not jeopardised. This dual-track decision is supposed to establish a bridge between economic viability and climate protection. ###

Translated from German, this article was first published in March 2017 by Politik für Europa – 2017plus, a project by FES. For more information on the work by Friedrich-Ebert-Stiftung on these issues contact Freya Grünhagen, Freya.Gruenhagen(at)fes.de.

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