The European Union is looking to spark an emission-reduction arms race as global climate talks draw near.
The EU is proposing a series of stringent climate measures, and one of them is pushing other countries to take tougher action. The moves are ambitious and pricey, and many will be controversial. But that doesn’t mean they shouldn’t be attempted elsewhere as the ugly effects of climate change are increasingly on display.
There are hurdles. It remains to be seen if some of the biggest emitters, notably China, can be drawn in, especially in the timeline necessary. Even before that, the EU leadership must bring its member countries, which collectively account for 8 per cent of global emissions, on side.
The 27-country European body rolled out a host of regulatory, tax and trade policies to get to its goal of reducing greenhouse gas emissions by 55 per cent from 1990 levels by the end of this decade. The grand target is net-zero emissions by 2050.
This has major economic implications. Investments in clean energy needed to reach the targets by 2030 could top €1.2-trillion (US$1.4-trillion), according to BloombergNEF. This shows the sheer scale of what’s required by both governments and the financial sector to achieve the aims deemed necessary to avoid the worst effects of climate change – and in only one region.
On this side of the pond, Canada and the United States, which account for 17 per cent for global emissions, talk good games but have been slow with concrete action and enforcement. They will have to accelerate the energy transition to meet even their own recently toughened targets, let alone pick up the gauntlet Europe is throwing down.
These are the stakes as countries prepare to meet in Glasgow, Scotland, for United Nations climate talks in November. Simmering in the background are this summer’s punishing heat waves and rash of wildfires in the western portions of North America and elsewhere, which have only added immediacy to the need for action.
The EU measures, branded as Fit for 55, include mandating only zero-emission vehicles by 2035 – effectively putting an end to sales of gasoline and diesel-powered cars and trucks. This will mean Europe’s automakers, such as Volkswagen AG, won’t be able to falter in their stated goals to make electric and other zero-emission vehicles their dominant products in that same time frame.
There are plans to expand the continent’s carbon market and, importantly, speed up the rate at which emission caps shrink, making polluting more expensive each year. The EU will also impose new taxes on aviation and shipping fuel, lifting demand for low-carbon versions.
The body wants to vastly increase the amount of CO2 that can be absorbed by sinks, including forests and farmlands, by 2030, and boost energy efficiency in numerous sectors of the continent’s economies.
It is proposing to expand use of renewable energy to 40 per cent, up from the current target of 32 per cent, which would be more than double the percentage today.
Finally, importers will face a tariff, called a Carbon Border Adjustment Mechanism, on cement, aluminum and steel from jurisdictions with laxer environmental standards in efforts to avoid what’s known as carbon leakage.
Time will be tight. The measures need approval from the member states and that is expected to take two years. The EU proposes setting up a fund worth as much as €72.2-billion to help poorer countries make the necessary changes to their economies and prevent financial pain at the consumer level.
There is no question that the EU seeks to push other countries to more ambitious action as governments seek to limit the average global temperature increase to 1.5 C, in hopes of preventing worse droughts, storms and coastal erosion. The question is whether the rest of the world will heed the call.
China, accounting for 28 per cent of global emissions, is a big worry. The country is in the process of starting up its own carbon market, being billed as the world’s largest. It will cover power companies responsible for half of China’s emissions. China is also a major exporter of environmental technology, notably solar panels.
These are positive developments, but they must be weighed against the reality of what is happening within China’s borders. Of the 25 most emissions-intensive cities in the world, 23 are in China, according to the journal Frontiers in Sustainable Cities. In addition, the Chinese Communist Party is notoriously resistant to international peer pressure on economic and other issues.
At home, Canada is beginning to make strides, by earmarking serious funding to net-zero initiatives and urging the private sector to take stock of greenhouse gas emissions using the global benchmark template for measuring greenhouse gasses, as well as assessing business risks related to climate publicity and technology. Oil sands producers are now pledging to meet net-zero goals.
However, if Europe is setting a bar with its measures, Canadians should prepare for much bigger changes to its economy and trade relationships than have already been forecast.
Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at email@example.com.