EU Leaders Poised for Clash Over New Climate Goal at Summit

A brewing spat over the European Union’s plan to tighten its 2030 climate goal is adding to a list of conflicts that the region’s leaders will have to deal with at a meeting next week, threatening to delay the start of an unprecedented green overhaul.

Old fault lines between eastern and western member states are resurfacing over the costs of an ambitious economic clean-up just as Poland and Hungary threaten to veto the bloc’s budget and a recovery fund. EU leaders will tackle these and other issues at a summit in Brussels Dec. 10-11.

At the heart of the climate conflict is the effort to deepen the EU emissions-reduction target to at least 55% by the end of the next decade from 1990 levels, a key element of the European Green Deal. Raising the ambition from the existing goal of 40% would need an additional 350 billion euros ($424 billion) per year for investment in energy production and infrastructure.

That’s a burden that risks falling disproportionately on the shoulders of coal-dependent and poorer nations, according to Poland, Bulgaria, Czech Republic, Hungary and Slovakia. Those countries are seeking changes to a draft statement by EU leaders that would ensure more financing for the region.

EU Leaders Poised for Clash Over New Climate Goal at Summit

“Adequate financial compensatory mechanisms corresponding to the needs, as well as a just balance among member states of the efforts and opportunities linked to the transition could encourage our country and make the extremely swift steps towards emission reduction feasible for us,” Bulgaria said in a document sent to other EU nations and seen by Bloomberg News.

Putting both climate and budget on the summit agenda could increase the chances for the leaders to broker a deal, according to Rafal Trzaskowski, the mayor of Warsaw and a leading Polish opposition party member. Poland could drop its veto over the budget, opting to sue the EU over the contested rule-of law mechanism at a later stage, in exchange for concessions on climate, he said.

“The fact that you have more legal bricks on the table allows for more flexibility in creating these agreements,” he said Thursday on a climate panel. “It will help to create an agreement which will be very complicated but will allow everyone to come home and claim some victory.”

A potential delay in adopting the climate target could push prices in the EU carbon market lower and keep businesses from gaining clarity as they prepare for the landmark environmental clean-up. It could also shake trust in Europe’s ability to realize major initiatives, and have knock-on effects on secondary legislation planned in coming months in areas ranging from transportation to energy production.

At risk could also be the EU credibility as the leader of the global fight against climate change, a group of nine countries including Denmark, Spain, Finland and Ireland said in a document seen by Bloomberg News. Under the Green Deal, Europe wants to be the world’s first climate-neutral continent by 2050, a goal already endorsed by the heads of government.

EU Leaders Poised for Clash Over New Climate Goal at Summit

Once they approve the intermediate 2030 objective, the EU plans to submit it as the region’s new contribution to the Paris Agreement. United Nations Secretary General Antonio Guterres earlier this month urged the bloc to do so before an international climate summit co-hosted by the UN, U.K. and France on Dec. 12.

“It is important that the target is at least 55%,” said the group of countries also including Latvia, Luxembourg, the Netherlands, Portugal and Sweden.

The biggest sticking point is defining how to reach a stricter target. The buzzword at the summit will be “the enabling framework,” EU jargon for the set of agreed conditions to make the green transition happen. Bulgaria said they should include continued targeted support for member states with lower GDP, use of state-aid rules to encourage the clean shift and changes to the region’s carbon market to reflect “different possibilities” of member states to cut emissions.

For the group of nine countries pushing for a swift adoption of the target, the enabling framework is already there, including the principle that 30% of the EU budget for the next seven years and the region’s 750 billion-euro recovery package will be spent on projects linked to climate.

The catch is that without Poland and Hungary lifting their veto over the budget and economic stimulus, the planned spending will not materialize. An EU diplomat involved in the talks said it’s difficult to imagine how Poland could support the transition to a low-carbon economy if it blocks the budget meant to help finance the shift.

©2020 Bloomberg L.P.

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