Europe’s Push for Tougher Climate Goals Puts Merkel in Spotlight

The European Commission’s hopes to reduce carbon emissions are likely to hinge on Germany’s Angela Merkel.

The 66-year-old chancellor leads the European Union’s biggest economy and its biggest polluter, which is also home to the continent’s most powerful auto industry. What’s more, Germany also holds the bloc’s rotating presidency until the end of the year, placing Merkel in the middle of the negotiations when EU governments start to discuss the proposal and leaders debate it, most likely at a summit next month.

With the EU still reeling from the coronavirus recession, the bloc’s executive arm on Wednesday proposed cutting 2030 carbon emissions by at least 55% from their 1990 levels to help make the energy transition a driver of economic recovery. The current target is a 40% cut and many industries are already balking at the prospect of tougher rules that already pushed carbon prices to 14-year highs.

Europe’s Push for Tougher Climate Goals Puts Merkel in Spotlight

Before the European Parliament and capitals decide on the final shape of the plan, it needs to be endorsed by all 27 EU leaders, and Poland is already signaling its unhappiness that the commission wants to increase the burden on member states without saying where the money will come from to pay the extra investment that will be required.

“The new target is extremely ambitious and will require a major overhaul of almost all existing policies and measures,” said Tomas Wyns, a researcher at the Institute of European Studies at the Brussels Free University. “The size and speed of green investment will have to be much bigger and faster than today.”

Germany has vowed to lead a green industrial revolution in Europe and Merkel has signaled she would in principle endorse deepening the EU’s 2030 emissions-reduction to 50%-55%. Yet she has a mixed record in fighting climate change, endorsing stricter EU emission caps in general while seeking exemptions for the German car makers.

While Merkel was an early supporter of EU goals to slash greenhouse gases by 20% in 2020 and 40% in 2030 from 1990 levels, her government worked behind the scenes to water down a 2020 carbon-dioxide reduction target imposed on car manufacturers and resisted -- unsuccessfully -- moves by EU partners to toughen a proposed 2030 goal for them.

“This is the defining moment for Merkel’s climate and industry legacy,” said Julia Poliscanova, senior director at the Brussels-based Transport and Environment lobby.

Europe’s Push for Tougher Climate Goals Puts Merkel in Spotlight

Merkel, who is planning to step down after next year’s German election, is likely to come under pressure at home once again. German car makers are already frustrated that the government’s 130 billion-euro economic-recovery package in June included plenty of help for green programs and electric autos but -- unlike her government’s last stimulus package in 2009 -- provided no money for combustion-engine vehicles.

“Policy makers need to put in place not only targets but also the required supportive policies for all vehicle types, without which these targets will simply not be achievable,” Eric-Mark Huitema, head of the European Automobile Manufacturers’ Association, said in an emailed statement. “We recognize the desire to be a global trailblazer when it comes to climate action, but we will need an unprecedented regulatory shift to ensure all the right enabling factors are secured.”

Nevertheless, the Fridays for Future protests and a rise in support for the German Greens signaled the many Germans are ready to see their country take the lead on climate and helped persuade Merkel to introduce a 54 billion-euro domestic climate package last year. The question is whether she and her colleagues can come up with a plan that is robust enough to see off concerns about the economy.

“Germany would like to lead the process of increasing climate ambitions together with France,” said Susanne Droege, senior fellow at the German Institute for International and Security Affairs SWP. “I wouldn’t rule out, however, that after the presidency we end up in a situation where some parts of tougher regulation will be blocked because of the coronavirus crisis and its economic ramifications.”

©2020 Bloomberg L.P.

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