EU Leaders Fail to Bridge Gap on Sharing Cost of Green Goals

(Bloomberg) -- European Union leaders called on the bloc’s regulator to propose rules on how to meet a stricter climate target for the next decade, leaving open the divisive issue of how to apportion the burden of emissions cuts.

The bloc’s heads of government discussed how to calculate national emissions-reduction targets outside the EU carbon market at the second day of a summit that began on Monday in Brussels. With emissions prices surging to records, they also debated an idea considered by the European Commission to extend carbon trading to heating and transport, an initiative under fire from some lawmakers, industry and consumer organizations.

“This is a very complex debate, with many areas which are interconnected,” European Council President Charles Michel said. “We agreed to return to the issue.”

The meeting set the scene for a package of measures that the Commission is due to propose in July to align the EU’s economy with a stricter climate target for 2030 -- the Green Deal, which seeks to make everything from cars to power production and trade more sustainable.

“The European Council invites the Commission to swiftly put forward its legislative package together with an in-depth examination of the environmental, economic and social impact at member state level,” the EU leaders say in a statement after the summit.

Sharing the burden exposed the divide between the richer western countries and poorer eastern members as the 27-nation EU seeks to reinforce its position as a global leader in reducing pollution. While the tougher 2030 goal of reducing emissions by at least 55% from 1990 levels is not questioned, the bloc needs to agree how to get there, said European Commission President Ursula von der Leyen said.

East-West Divide

Leaders failed to reach unanimous agreement on a part of their draft political statement referring to the methodology for setting national climate targets, agreeing to return to the issue once a Commission proposal has been unveiled. The draft rules will need to be adopted by national governments and the European Parliament to come into force.

Poland, Romania and other eastern countries that largely depend on fossil fuels want the EU to stick to its methodology of setting individual emission-reduction goals for member countries outside the carbon market. The targets are based on gross domestic product, with less-affluent nations having less ambitious objectives.

Under the EU’s existing target of cutting greenhouse-gas emissions by 40% by 2030, Bulgaria has to keep emissions unchanged from 2005 levels and Poland has to lower them by 7%. That compares with a 40% cut for Sweden and a 38% goal for Germany.

As part of the Green Deal, the bloc will toughen its carbon-cut goal to at least 55% by 2030 from 1990 levels. Western nations, including Denmark, Sweden and Luxembourg, would like the methodology to take into account cost-effectiveness, a move eastern countries fear would disproportionately shift the burden onto poorer member states.

Heating, Transportation

A potential expansion of the bloc’s carbon market was also divisive. The EU Emissions Trading System, which imposes shrinking pollution caps on manufacturers, utilities and airlines, covers around 40% of the bloc’s greenhouse gases.

The commission is mulling a parallel cap-and-trade program for heating and road transportation, areas that now fall under national targets. Such a move would be accompanied by social policies to protect the less affluent, von der Leyen said.

The idea of expanding the EU carbon market has already drawn criticism from lobbies and policy makers, including the Green group in the European Parliament, the European consumer organization BEUC, the Transport & Environment lobby and the Climate Action Network.

Member countries are largely opposed, too, fearing that such a measure would boost the costs for consumers, fueling inflation and leading to energy poverty.

©2021 Bloomberg L.P.