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New European Commission Sets Ambitious Targets for Attaining Progressive Environmental Policy

Late last month, the European Parliament (“Parliament”) confirmed Ursula von der Leyen as President of the European Commission (“Commission”) along with her team of 26 Commissioners. The first woman ever to lead the Commission secured a strong majority in favour of her team, the first without a UK member. With 461 votes in favour, 157 against and 89 abstentions, the new President of the Commission addressed the Parliament citing climate policy as a pressing issue faced by the new executive team.

Amidst the European Parliament debating whether to declare a “climate emergency” in Europe, von der Leyen described climate change as “an existential issue” for Europe and for the world and claimed the European Green Deal “is a must.” Von der Leyen, further recalled that the European Green Deal has the goal to take effective action on climate change with Europe leading the way worldwide. The new Commission’s intent is to transform Europe into the world’s first climate-neutral continent by 2050. While announcing the new team, von der Leyen presented Frans Timmermans as Executive Vice-President for the European Green Deal, giving him also the position of Climate Action Commissioner. Timmermans is very shortly expected to outline the Commission’s new environmental priorities in the European Green Deal.

The core of the European Green Deal will be a climate law, which was announced to be tabled within the first 100 days of the new Commission taking office. Although the new Commission President revealed few details, she said the bill will seek to help cutting emissions while creating jobs. In von der Leyen’s words the EU is currently undergoing “a generational transition towards climate neutrality by mid-century. But this transition must be just and inclusive or it will not happen at all.” The bill is set to contain an EU industrial strategy which will enable domestic businesses – big and small – to innovate and develop new technologies while creating new markets. Von der Leyen further stated that any new EU trade deals will include provisions protecting the environment and that the European Investment Bank would become the bloc’s climate transition bank.

Additionally, the bill will contain the legal requirement for Europe to reach net-zero emissions by 2050. Indeed, one of the goals set for the new Commission is to increase the EU’s climate target from a 40% reduction in carbon emissions by 2030 to a 50-55% cut by the same date – the higher target being subject to a cost-benefit analysis due in 2021. This ambitious target for the reduction of carbon emissions was supported by a leading group of stakeholders and companies such as Unilever and Coca-Cola, amongst others. Moreover, the European Corporate Leaders Group, convened by the University of Cambridge Institute for Sustainability Leadership, agreed that a minimum of 55% reductions for 2030 is both necessary to remain in line with the 2050 climate neutrality goal and feasible from a technical and economic point of view, with early action being more cost-effective than delay.

However, the achievement of the goal to increase the EU’s climate target from 40% to 50% or more by 2030 will not be an easy task. The Commission will have to rely on Member States unanimously backing the mid-century target, something that has – so far – proved to be elusive given the objections of the Czech Republic, Estonia, Hungary and Poland. To secure Poland’s support, for example, von der Leyen pointed to the Just a Transition Fund, a financial tool linked to the EU’s carbon market, dedicated to helping coal-affected communities build strong and diversified new energy economies, particularly aimed at Member States such as Hungary and Poland. Von der Leyen explained that resources from the fund will be allocated to coal dependent regions, while the fund itself will be managed by regional policy Commissioner Elisa Ferreira.

Finally, as reported previously, the imposition of a carbon border measure (or carbon border mechanism) has also been set as one of the top priorities of the new Commission. Van der Leyen announced that the new Economy Commissioner, Paolo Gentiloni, will be attributed the task of leading the proposal while working closely with Frans Timmermans in his capacity of Executive Vice-President for the European Green Deal.

On 9 December 2019, during the COP25 climate summit, Frans Timmermans warned that the EU is ready to impose the carbon border mechanism should other leading economies fail to follow the same trend. He expressed that the EU is aiming to protect its domestic businesses against competition from countries with less rigorous environmental standards. 

Hong Kong traders can expect the adoption and implementation of an ambitious EU climate change policy under the mandate of the new European Commission. The Commission is now expected to reveal its strategy for the adoption of the European Green Deal, the steps to take for enacting a new climate law, and, eventually, the implementation of a new carbon border measure.

Content provided by Picture: HKTDC Research
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