ETS2 emission allowances, climate targets of 2040 and the end of internal combustion engines by the end of 2035. These three topics inextricably linked to green policy are considered by the European Council to be key to maintaining European competitiveness. That is why she named the point where they are contained.
All of the above points are at the very least worrying business because of the impact on their global ability to compete with non-EU companies. And all of them are taken as a chance to reduce CO2 production, but at the same time as a burden that falls on the shoulders of EU companies at a time when the Union is fighting with China and the USA in global trade.
Compared to both powers, Europe is pulling the tightrope in many ways, and green policy helps in some ways. For example, in the automotive sector, Chinese automakers dominate in terms of price. In other words, they sell electric cars of the same quality as European ones for less money. As a result, interest in European products, for the production of which Europe also needs China, is decreasing. The old continent, for example, does not have sufficient infrastructure for the production of batteries that power electric vehicles.
The climate goals, on the other hand, require Europe to transform by 2040 to reduce CO2 production by 90 percent compared to 1990. Neither China nor the United States have these restrictions to the same extent. As a result, European business bears an extra burden. Additionally, US policy has shifted toward protectionism in recent months.
Former governor Mario Draghi warned a year ago in his report, according to which the Commission is now proceeding with the proposals, against the loss of Europe’s competitiveness and decline compared to the aforementioned powers. He calls Europe’s shift into the shadows of Beijing and Washington a slow agony.
That is why the leaders of the member states met in Brussels on Thursday to present their position on the burning points of the European economy to the imaginary government of the EU – i.e. the European Commission. But the result seems embarrassing.
We call on the Commission
Their recommendations published on the website of the European Council do not indicate very specific steps. According to SZ sources, this was not even their goal. The EU leaders wanted to set the boundaries within which further negotiations of the EU institutions would take place. Among them is the vote on climate goals, which should take place in November at the Council of Ministers of the Environment.
In the case of emission allowances, which are a hot topic for the Czech Republic and even Prime Minister Fiala explicitly mentioned them before leaving for Brussels, the prime ministers welcome even the Commission’s mere effort to revise the system.
There was a major breakthrough on the matter on Tuesday, when environment ministers met with Climate Commissioner Wopke Hoextra in Luxembourg. Nineteen of the twenty-seven member states called on the Commissioner, based on the Czech initiative, to revise the emission reduction target.
As Environment Minister Petr Hladík explained to SZ Byznys in an interview on Tuesday, the change that the Commission is now proposing consists of five mechanisms. The first of these is that if the price of a CO₂ allowance exceeds 45 euros per tonne, more allowances will automatically be released to the market. The sum is supposed to be up to 80 million per year. If, on the other hand, the allowances are not used, they will remain in reserve until 2030. The system should also be more flexible in accessing finances from the ETS 2 system. The proposal will now have to be approved by the European Parliament. Hladík is not afraid of his praise.
“That proposal has the support of 19 member states. I can’t imagine it not going through parliament,” he said.
The second burning point was the climate goals of 2040. Prime Minister Fiala mentioned them as his priority before leaving for Brussels
“We are pushing for a clause that would allow the adjustment of the emission targets for 2040 if circumstances change over time. We also demand respect for the principle of technological neutrality. This is important for the Czech Republic from the point of view of the use of the core. We want the Commission to prepare impact studies to make it clear what the adoption of emission targets would mean for individual sectors. On the contrary, we do not want a further increase in ambitions in climate policy,” he calculated the Czech requirements.
We have a clause
From the conclusions of the Council, it is difficult to conclude whether Fial succeeded in all points of his endeavours. However, in the case of the first priority, the answer is – yes. The Prime Ministers called on the Commission to come up with a review clause by 2040 in the context of the interim climate goals. This clause will allow the goals to be changed in light of the latest scientific knowledge, technological progress and changing challenges.
Furthermore, the meeting of prime ministers concluded that the Commission should develop the conditions for supporting European industry and citizens in achieving the interim goal for 2040. Mario Draghi also considers the effort for competitive decarbonization to be key in the transition to green sources. However, the public did not learn from the conclusions how the legislators want to achieve it.
The last of the many points that the Czech Prime Minister mentioned before his trip to the European Council was the automotive sector. This is crucial for Europe, as it makes up roughly eight percent of the EU’s GDP.
Here the Prime Ministers are calling on the Commission to continue to present further simplifying legislative packages. Among the best-known in this regard are the so-called Omnibuses, which loosen the obligations of European companies to report climate goals.
The question remains whether the EU will really lead to the strengthening of competitiveness when it introduces new measures following one direction, so that in the following months one institution calls on the other to cancel them.
