EU States Now Have to Split the Bill for Their Climate Moonshot

The European Union’s ambitious plan to slash carbon usage over the next decade kicks off years of wrangling as members figure out if and how they can afford a program that would transform every corner of the bloc’s economy.

Coal-dependent Poland staked its claim for funding before the European Commission had even approved its plan and a German official immediately predicted the sweeping ambition of the plan will spark concerns in many countries. In France, where Emmanuel Macron faced months of at times violent demonstrations after trying to raise gasoline taxes, the president’s allies are worried about the impact of higher fuel and heating costs on families.

“That doesn’t drive the change, it creates frustration,” Pascal Canfin, a member of Macron’s party who chairs the environment committee at the European Parliament, said in an interview on Bloomberg radio, noting that in France a similar move resulted in the yellow-vest protest movement.

The commission’s proposal introduces a raft of new rules that are designed to allow the bloc to reach a legally binding target to cut emissions by 55% by 2030. If the member states agree to implement it in its current form, the plan would tighten pollution caps in the EU carbon market and bring sectors like home-heating and transport fuels under a new emissions-trading program for the first time, as well as eventually phase out the production of cars with gasoline or diesel engines.

“We are going to look very closely at what this means in practice,” Dilan Yesilgoz-Zegerius, a junior minister for climate in the Netherlands said in an emailed statement. “We pay particular attention to the feasibility and affordability of proposals.”

The proposed reform will now move to the European Parliament where the different factions will have a chance to amend the proposals. Member states will be working on the plans in parallel and when they have their own version, they’ll come together with the legislature and the commission to thrash out the final package.

The whole process usually takes around two years. And that’s if things go smoothly.

“If you don’t like an element in the package we can talk about that, but you can’t dispute the goal,” commission climate chief Frans Timmermans said at a news conference, underlining that the overall target for 2030 is already legally binding. “So if you don’t like part of the package, come with an alternative that could deliver the same results.”

Timmermans also highlighted the creation of a new carbon trading program for heating and road transport fuels, as well as the emissions standards for cars, as the most likely sticking points. Both have already triggered controversy in internal meetings that the commission held to hash out the package.

The German official also said that the plans for housing and transport will spur a lot of debate in Europe’s biggest economy. Italy’s biggest worry is that the new rules will add more layers of bureaucracy, one official said, at a moment when Prime Minister Mario Draghi is trying to cut red tape in order to boost economic growth.

Polish Prime Minister Mateusz Morawiecki told reporters on Wednesday morning that he simply wants to secure “as much funding as possible” to help with its transition.

Timmermans and his boss, commission President Ursula von der Leyen, are betting that they can smooth the path to approval by convincing the many stakeholders that they’ve come up with a fair way to share the pain of a necessary undertaking.

“The onus is on the commission to prove that this leads to solidarity and fairness,” Timmermans said. “If we can prove that, then I think the resistance will be less. If we fail to prove that, then the resistance will be massive.”

©2021 Bloomberg L.P.

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