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The European Green Deal is Announced Setting Out Plans for Future EU Laws

The European Green Deal resets the Commission’s commitment to tackling climate and environmental-related challenges. It is a new strategy that aims to transform the EU into a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050. Of relevance to imports, the Green Deal also recognises the need to maintain the EU’s security of supply and competitiveness even when other countries are unwilling to act. To deliver the Green Deal, it is believed that there is a need to rethink policies for clean energy supply across the economy, industry, production and consumption, large-scale infrastructure, transport, food and agriculture, construction, taxation and social benefits. Therefore, all aspects of the economy and production could, in principle, be covered by the far-reaching plan.

By summer 2020, the Commission will present an impact-assessed plan to increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50% and towards 55% compared with 1990 levels. To deliver these additional greenhouse gas emissions reductions, the Commission will, by June 2021, review and propose to revise where necessary, all relevant climate-related policy instruments. As such, new laws which affect the way goods are produced, consumed and disposed of could be proposed, or existing laws amended. Importantly, the Commission’s text notes that, as long as the EU’s many international trading partners do not share the same ambitions as the EU, there is a risk of carbon leakage, either because production is transferred from the EU to other countries with a lower ambition for emission reduction, or because EU products are replaced by more carbon-intensive imports.

Should differences in levels of ambition worldwide persist, the Commission has pledged to propose a “carbon border adjustment mechanism”, for selected sectors (yet unknown), to reduce the risk of carbon leakage. This would ensure that the price of imports reflect more accurately their carbon content. This measure will, it is stated, be designed to comply with World Trade Organization rules and other international obligations of the EU.  Previously, the EU press was referring to this novel concept as a “carbon  border tax”, but the word tax is not used by the Commission.

As part of the Green Deal, in March 2020, the Commission will adopt an EU industrial strategy to address the twin challenges of green and digital transformation. Together with the industrial strategy, a new circular economy action plan will help modernise the EU’s economy. A key aim of the new policy framework will be to stimulate the development of lead markets for climate neutral and circular products, in the EU and beyond. While energy-intensive industries, such as steel, chemicals and cement, are indispensable to Europe’s economy, as they supply several key value chains, the decarbonisation and modernisation of these sectors is felt to be essential.

Importantly for traders including those exporting from Hong Kong, the circular economy action plan will include a ‘sustainable products’ policy to support the circular design of all products based on a common methodology. It will prioritise reducing and reusing materials before recycling them. It will foster new business models and set minimum requirements to prevent environmentally harmful products from being placed on the EU market. Extended producer responsibility (such as that currently applied to electronics or packaging) will also be strengthened.

It is intended that action will focus in particular on resource-intensive sectors such as textiles, construction, electronics and plastics. The Commission will follow up on the 2018 EU plastics strategy focusing, among other things, on measures to tackle intentionally added micro plastics and unintentional releases of plastics, for example from textiles. The Commission will develop requirements to ensure that all packaging in the EU market is reusable or recyclable in an economically viable manner by 2030. It will develop a regulatory framework for biodegradable and bio-based plastics, and implement measures on single-use plastics.

Also, with regard to products placed on the EU market, the circular economy action plan will include measures to encourage businesses to offer, and to allow consumers to choose, reusable, durable and repairable products. Hong Kong manufacturer-exporters should note that the action plan will analyse the need for a ‘right to repair’, and curb the built-in obsolescence of devices, in particular for electronics. Consumer policy will, furthermore, help to empower consumers to make informed choices and play an active role in the ecological transition. Interestingly, new business models based on renting and sharing goods and services will play a role as long as they are truly sustainable and affordable.

An Annex to the Communication on the Green Deal sets out an indicative timetable of actions. Those which seem particularly relevant to traders are as follows:

  • Proposal on a European ‘Climate Law’ enshrining the 2050 climate neutrality objective : March 2020;
  • Comprehensive plan to increase the EU 2030 climate target to at least 50-55%: Summer 2020;
  • Proposal for a carbon border adjustment mechanism for selected sectors: 2021;
  • Circular Economy Action Plan, including a sustainable products initiative and particular focus on resource intense sectors such as textiles, construction, electronics and plastics: March 2020;
  • Legislation  on batteries in support of the Strategic Action Plan on Batteries and the circular economy: October 2020.

Please click on the following links to view the Commission Communication on the European Green Deal and its Annex.

Content provided by Picture: HKTDC Research
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