Opinion

The EU needs a bold climate strategy

Scientists report that global temperature increases must be limited to below 1.5 degrees Celsius. With global greenhouse gas emissions continuing to increase and rising temperatures driving up the frequency of extreme weather events, the world needs a greater commitment to climate policy.

By: Date: July 19, 2019 Topic: Energy & Climate

This article was originally published in The Nikkei Veritas, Caixin, Rzeczpospolita and Ta Nea

The Nikkei Veritas logo

Caixin logo

Ta Nea logo

Rzecszpospolita logo

In order to avert catastrophic climate change for the entire human population, global temperature increases must be limited to below 1.5 degrees Celsius. Scientists have shown that achieving net-zero carbon emissions before 2050 is essential to this achievement, which has become a key goal of the Paris agreement. But as global greenhouse gas emissions continue to increase and rising temperatures drive up the frequency of extreme weather events, the world needs to commit much more to climate policy.

Surveys confirm that citizens in the EU want to see progress on fighting climate change. Especially the young generation has been vocal and has already shaped elections with its climate demands. The European Union should therefore play a central role in global efforts to decarbonise. True, Europe produces only 16% of global emissions and the EU only 10%. But if the EU does not decarbonise, less developed parts of the world may find it even more difficult to convince their population to do so. A successful decarbonisation strategy in the EU could also become a business opportunity where the EU could export technology, for example to Africa or India, two regions where emissions are set to grow substantially in the coming decades as they develop. In turn, failing to address the challenge would not only be considered inacceptable by citizens, but could mean that the EU loses out on key technological developments that will shape the future. For example, already now the EU may be lagging on electro mobility.

Yet, the EU is far away from its self-set goals of decarbonisation. While the share of renewable energy in EU gross final energy consumption rose from 10.6 percent in 2007 to 17.5 percent in 2017, this number also means that more than 80% of energy consumption is still not renewable. Moreover, as GDP continues to grow, overall emissions are falling only quite slowly and actually even increased in 2017. Certain sectors such as transport lag behind in their efforts to reduce their emissions and coal phase out is too slow in several countries including Germany and Poland. Finally, Europe actually consumes more greenhouse gases than it produces. In fact, consumption amounts to 18% of global consumption – in other words, Europe’s imports are significantly more carbon-intensive than its exports. To succeed with decarbonisation, the EU will have to change gears and pursue three priorities.

First, the EU needs to put a price on greenhouse gas emissions in all sectors. The current emission trading system only covers some 50% of emissions. Moreover, the price for emission certificates is too low to provide a sufficient incentive to decarbonise. The emission trading system should either cover all sectors or be complemented with a tax on emission that are not covered by the system. Once an all-encompassing and expensive tax on emissions is established, the price signal should drive significant innovation as well as individual efforts to decarbonise. But to avoid even more carbon leakage the EU needs to establish also a tariff on imports of carbon-intensive products to disincentivise firms from shifting production to countries that have lower taxes on emissions.. Such a step would be compatible with the WTO and is also called for by a large group of US economists. Given the size of the EU’s market, it would also provide an incentive to third countries to adjust their production processes.

Second, industrial policy can usefully support decarbonisation. For example, the state needs to set standards that make it easier to switch from the current carbon-intensive mobility towards electro mobility. The EU should also support research and development of new technologies. The government also needs to play a role in the building of the necessary infrastructure for clean electric energy. Public funding for innovation will help reduce the cost of clean energy.

Third, serious climate action will be hugely transformative for the entire economic and social system. It will touch vested interest and result in social fallout as the French yellow vest movement has shown. Lowering the cost of the transformation is all the more important as key industries depend on access to affordable energy. The EU should therefore go ahead with a significant public investment programme. Moreover, the carbon tax proceeds should be redistributed to reduce the burden on low-income households.

Only bold action will suffice to avoid a global climate catastrophe. The EU needs to step up to the challenge.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to communication@bruegel.org.

View comments
Read article More on this topic More by this author

Blog Post

Non-performing loans’ legacy versus secondary markets

Eleven years since the start of Europe’s financial crisis, and the legacy of non-performing loans in the EU, though much smaller, is still a live issue for some member states.

By: Joanna Surala Topic: Finance & Financial Regulation Date: December 10, 2019
Read article Download PDF More on this topic More by this author

Policy Contribution

The European Union-Russia-China energy triangle

Concern is growing in the European Union that a rapprochement between Russia and China could have negative implications for the EU.

By: Georg Zachmann Topic: Energy & Climate Date: December 9, 2019
Read article More on this topic More by this author

Opinion

Europe can take a bigger role in providing public goods

The EU should invest where it can deliver more value than member states acting alone.

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: December 5, 2019
Read article More on this topic More by this author

Opinion

Why border carbon adjustment is important for Europe’s green deal

The European Commission President-elect Ursula von der Leyen is pursuing ambitious environmental targets, notably to reach zero net emissions across the EU by 2050. This transition requires pricing emissions to incentivise producers to develop greener alternatives, while avoiding putting domestic producers at a disadvantage.

By: Guntram B. Wolff Topic: Energy & Climate Date: November 27, 2019
Read about event More on this topic

Past Event

Past Event

Enhancing climate policy through co-creation

First PARIS REINFORCE Stakeholder Council Dialogue

Speakers: Haris Doukas, Ajay Gambhir, Georg Zachmann, Dirk-Jan van de Ven, Jorge Moreno, Alexandros Nikas, Vangelis Marinakis, Glen Peters, Alexandre Koberle, Marc Vielle, Andrea Herbst, Rocco De Miglio, Annela Anger-Kraavi, Baptiste Boitier, Lorenza Campagnolo, Zsolt Lengyel and Joeri Rogelj Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 21, 2019
Read article More by this author

Blog Post

Bank regulation in the European Union neighbourhood: limits of the ‘Brussels effect’

The EU model of financial market regulation is increasingly copied by third countries. In this context, the EU’s efforts to promote its model beyond its borders should take into account the underdevelopment of financial markets in many partner countries, and the often insufficient capacity of regulators and supervisors.

By: Alexander Lehmann Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: November 20, 2019
Read article Download PDF More on this topic

Working Paper

The state of China-European Union economic relations

More can be done to capture the untapped trade and investment opportunities that exist between China and the EU. China’s size and dynamism, and its recent shift from an export-led to a domestic demand-led growth model, mean that these opportunities are likely to grow with time.

By: Uri Dadush, Marta Domínguez-Jiménez and Tianlang Gao Topic: Global Economics & Governance Date: November 20, 2019
Read article More on this topic More by this author

Opinion

Under swollen tides, Venice says more about our future than our past

While tides high enough to submerge Venice used to be rare, occurring every two to three decades, they have now become increasingly regular. Five of the ten highest tides in recorded history occurred over the last 20 years, with the most recent one having occurred just last year. Is this the new normal?

By: Simone Tagliapietra Topic: Energy & Climate Date: November 18, 2019
Read article More on this topic More by this author

Podcast

Podcast

How to make the European Green Deal work (Part Two)

Nicholas Barrett and Guntram Wolff discuss industrial policy and the social consequences of the green deal with Grégory Claeys and Simone Tagliapietra.

By: The Sound of Economics Topic: Energy & Climate Date: November 14, 2019
Read article More on this topic

Opinion

Four pillars to make or break the European Green Deal

The recipe for a successful European Green Deal is as simple as it is breath-taking: to intelligently promote deep decarbonisation by accompanying the economic and industrial transformation this necessarily implies, and by ensuring the social inclusiveness of the overall process.

By: Simone Tagliapietra, Grégory Claeys and Georg Zachmann Topic: Energy & Climate Date: November 14, 2019
Read article More on this topic

Blog Post

China’s growing presence on the Russian market and what it means for the European Union

The European Union’s relationship with Russia is strained, but the two economies are nevertheless highly intertwined. A huge share of Russia’s exports go to the EU, while in the early 2000s, EU countries supplied more than half of Russia’s imports. The EU is also a major investor in, and lender to, Russia.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: November 6, 2019
Read article Download PDF

Policy Contribution

How to make the European Green Deal work

Ursula von der Leyen has proposed a European Green Deal that would make Europe climate neutral by 2050. With this Policy Contribution, the authors provide a first analysis on how to make this initiative work.

By: Grégory Claeys, Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance Date: November 5, 2019
Load more posts