European officials are preparing to introduce ambitious laws aimed at weaning one of the world’s largest and most polluting economies from fossil fuels much faster than other nations have promised. The proposals could include phasing out coal as a source of electricity and introducing tariffs on polluting imports – an idea with the potential to spark global trade disputes.
The package of around a dozen legislative proposals from the European Commission expected on Wednesday is intended to rapidly reduce greenhouse gas emissions and achieve an ambitious, already legally anchored climate target: The bloc of 27 nations has announced that its greenhouse gas emissions will be 55 percent by 2030 compared to 1990 levels are falling.
The legislation is expected to contrast sharply with the vague aspirations of various other countries to neutralize their emissions by mid-century. “It’s not just a big promise,” said Jennifer Tollmann, a Berlin-based analyst for E3G, a climate research and advocacy group.
The suggestions known as “Fit for 55” are just that – suggestions. It will take many months to negotiate between the 27 member countries and the European Parliament before they become law. And they will most certainly invite you to review Europe’s own reliance on fossil fuel extraction and burning in its own territories, from oil and gas drilling in the North Sea to coal mining in countries like Germany and Poland.
The most controversial element is a so-called border CO2 adjustment tax. It would impose tariffs on greenhouse gas emissions from products imported from outside the European Union and would effectively protect European companies from goods made in countries with less stringent climate policies. Products it could target include steel, cement, iron and fertilizers, according to a draft leaked in June.
This CO2 border tax could not only shake world trade and encourage a dispute over protectionism in the World Trade Organization, it could also create new diplomatic fault lines before the international climate talks in Glasgow in November.
The Glasgow meeting is an important moment for major emitter nations to show what they will do to tackle the greenhouse gas emissions that have put the world on a path to dangerous warming. Scientists have said the world as a whole needs to cut emissions in half by 2030, which would require the sharpest and fastest cuts from history’s biggest polluters, namely the United States and Europe.
All eyes are on the goals set by the US and China, which currently produce the largest amount of greenhouse gases, and most importantly, how to get there.
China and India have publicly criticized the idea of a CO2 border tax. Japan is not in the mood. And the United States just said it was considering the idea of its own carbon border tax.
It is still unclear exactly which products the tax is targeting. For example, the United States is particularly concerned about the potential impact on US-made steel, and it remains to be seen whether the marginal tax proposal would take into account the CO2 emission intensity of imported steel.
The United States is in a difficult position with a future European border tax. The Biden government is keen to reestablish transatlantic alliances, including with regard to climate change. Yet several US companies with no prospect of carbon pricing legislation in the United States could be vulnerable.
The Biden government has promised the prospect of its own carbon border tax, although its prospects would likely be bleak in a divided Congress. “It is certainly not off the table in any of the discussions,” said White House climate advisor Gina McCarthy on Tuesday at a conference organized by Bloomberg. “There are many possibilities here to see an adjustment of the CO2 limit as an opportunity.”
Other aspects of the legislative package are likely to be controversial within the European bloc of 27 countries itself. Efforts to phase out sales of new internal combustion engines are likely to encounter objections from some European car manufacturers. (Bloomberg reported this week that France was opposed to a proposed ban on the sale of new gasoline cars in 2035.) Efforts to phase out coal from power generation are likely to face opposition from countries with large coal plants like Poland and Hungary.
The timing of the European bill is crucial to highlight Europe’s position in promoting climate change and to put pressure on other major emitters, including China and the United States.
“This will be the first attempt to say that we don’t just commit to numbers, we have a set of guidelines, very precise guidelines,” said Laurence Tubiana, director of the European Climate Foundation and former chief climate negotiator for France in the United Nations climate talks, it said in a statement sent by email.